The 2016 CBA State of the Industry report revealed a dissonance between what retailers think their challenges are and what suppliers say theirs are. With this finding in mind, a panel of industry experts participated in a roundtable discussion on how both groups can work together to strengthen the channel.
Retailers included Heather Adams, owner, The Greatest Gift & Scripture Supply (Pueblo, Colorado) and CBA board member; Robin Hogan Ed.D., general manager, Christian Cultural Center (Brooklyn, New York); Steve Potratz, president, The Parable Group; and Sue Smith, chair of the CBA board of directors and manager of Baker Book House (Grand Rapids, Michigan).
On the supplier side were Mary Lou Alexander, Spring Arbor national sales; Bill Couey, SVP operations and people, DaySpring, and CBA board member; Nik Kennett, director of marketing, Kerusso: Jeff Ray, senior director of marketing, Warner Press; and Mark Taylor, chairman/CEO, Tyndale House Publishers.
How could incorporating digital technology into the physical store experience lead to growth?
ADAMS: If our inventory/POS system would have a better search engine, we could be much more effective with customers. If there were a tablet that could take a picture of a barcode or had a built-in scanner and integrate it into an order form as part of the POS system, it would enable us to order from the sales floor and be much more efficient. It would be highly efficient for inventory as well, but it needs to be reasonably priced.
ALEXANDER: Stores need to elevate their in-person experiences to stay ahead. Technology not only provides a vehicle but an upgrade to traditional settings.
Retailers have to look at what’s available to them to elevate the experience to generate growth. Can they use interactive tablets to showcase trends? How can they notify customers of new titles or items that are of interest to them? What digital signage can they use to promote inventory as well as local events? How can they humanize their brand through the digital experience? Should the store develop an app to keep frequent engagement? What social media contests could you host to bring in people?
COUEHY: We strongly encourage retailers to use and optimize their digital voice to reach out more effectively to their customers. How do you build community with the consumers who are already shopping and buying at your store? Stores must be actively using Facebook, Instagram, Twitter, and their websites to talk to their most loyal customers.
RAY: Retail-savvy shoppers are looking for a full experience that involves all of the senses. Most elements of the shopping experience can be attained by shopping online. What cannot be done is the physical. That is why “showrooming” has become so popular. Retailers need to give the physical shopper the full experience with little to no obstacles to purchase.
Suppliers say they need the retail store to adapt to new consumer realities. What aren’t stores doing, in particular, that they need to do?
ALEXANDER: People gravitate toward one-stop shops that encompass their lifestyle. Christian stores can thrive by evolving into an inclusive store. Stock your shelves with other subjects such as cookbooks, travel books, kids’ books, or inspirational gifts. Those coming in for cookbooks might also find a book on Christian living and vice versa. Diversify your inventory, and you’ll grow your customer base and disperse the Christian message.
Retailers should focus on three key initiatives to attract people to their stores: be relevant, stay community-centric, and look for partners who can help promote success.
COUEY: Romance consumers through enhanced in-store experience including workshops, events, and other activities. Invest to improve the curb appeal of your store with attractive window displays. Link exclusive online promotions to in-store redemption of coupons/gifts to get more frequent return traffic from loyal consumers. One thing we are consciously working on at DaySpring is to increase our company “cool factor” in order to attract and retain the right talent to help build our future and remain relevant to a wider audience of faith consumers. I think stores might consider doing the same thing.
HOGAN: Embrace online ordering [from customers].
KENNETT: The easiest opportunity here is social media. It’s now so easy for a storeowner to pull out their phone when new products arrive, snap a few pictures, and post them to the store’s Facebook or Instagram.
RAY: Personal interaction and community outreach activities are often what set Christian retail apart. Cutting overhead resources, like personnel, to attain better profitability, often times has taken the personal touch out of the retail store. Retailers like Nordstrom’s recognize this. How many times have you shopped in a Nordstrom’s where you are “left on your own”? Rarely.
Many studies in multiple industries state that in order to know who your customer really is, you need to go where they are. Many Christian retailers are missing this vital aspect in an effort to remain more profitable. It is a double-edged sword.
TAYLOR: Stores need to figure out how to make the sale to the consumer who is in the store. If he/she browses in the store and then intends to buy at a lower price from Amazon, the store has to make the sale. A sale at a discount is generally better than no sale at all.
How can suppliers help stores develop better church relationships, which is a priority for retailers?
ADAMS: When churches are offered direct mailing catalogs to order straight from the suppliers themselves (and the suppliers’ sales reps are now visiting churches), it simply eliminates the need for a store at all. I understand the need for higher profit margins, so if the supplier can sell it to churches for more than they can sell it to us, that makes sense to them. I understand the need to be a good steward of God’s money, so if the church can buy it from the supplier for less than they can buy it from us, that makes sense. If their advertising would state to “see your local Christian bookstore” or even give us as an option, that would be so helpful, but only if their prices don’t undercut ours. If they’re advertising lower prices, that would be detrimental to sending them to us.
ALEXANDER: Community engagement is a critical factor to any company’s success. Stores need to have a strong presence in all of the relevant local churches to understand the supply needs and establish relationships. By engaging the community, you’ll be able to spot opportunities to use local content to foster a following.
HOGAN: Supply retailers with church products in a separate catalog with special discounts to allow retailers the opportunity to supply churches and aid in relationship building.
RAY: I think many suppliers would be willing to share information about local churches if they knew that the churches were being serviced to a level above and beyond the customer expectations. I know that some suppliers would also offer revenue sharing for the same reason.
SMITH: This is difficult from both sides. I’ve seen plenty of suppliers develop product for stores to take out to churches, product specifically for church use. I’ve also seen suppliers send free samples to stores to hand out to churches, say at an event that the store is hosting. What I’d like to see is something that takes more intentionality. When a church calls a supplier for product, either for a quote on a bulk purchase or for just a purchase, wouldn’t it be wise for the supplier to at least ask, “Have you already tried your local Christian bookstore? They can give you the same deal that we can.” Of course, most stores don’t really know that suppliers will support them on the back end. Guess what…they will!
TAYLOR: Churches are looking for some level of discount from SRP, so stores and suppliers need to work together in determining how best to provide the optimal discount for the church customer. But in the final analysis, the key element is for the local store to develop a trusted supplier relationship with all of the local churches in the store’s trading area.
Suppliers reported that the biggest supply chain challenges in the next three years are cost and complexity of U.S. freight and shipping to retail; and collaborative planning, forecasting, and replenishment (CPFR) with retailers. Retailers say they need reduced costs through better supply chain and logistics efficiencies. How can both sides work collaboratively to meet these challenges?
ADAMS: Amazon’s shipping practices have driven up costs for all of us. Collaborative planning and forecasting has been difficult. I market with two different groups and we often have overlapping items, on sale for two different advertised prices. I often don’t get information enough in advance, so I end up re-buying something I just returned, not knowing it was going to be on sale the next month. This has been a real challenge.
COUEY: To us, the Christian retail industry has in many ways, trained consumers to expect low-cost, low-quality products in our stores. Our consumer research and experience tells us that consumers desire, particularly in gifts, beautiful, high-quality products to give as an expression of their faith. There is an old saying that we remind ourselves about a lot here: “The sting of low quality lasts long after the joy of low price is gone.” While stores need to offer a breadth of price points, both suppliers and retailers alike may have put too much emphasis on cheap products as an answer to save our industry. We believe the answer is to offer our consumers high-quality items that reflect who they are as Christians in a classy way.
HOGAN: Have seasonal free freight costs and lowered cost freight throughout the year.
KENNETT: There are tradeoffs for every efficiency you can find within the supply chain. Stores don’t want to hold too much inventory because there’s cost associated with that, and yet ordering smaller quantities of items could lead to logistics inefficiencies or retailers missing out on volume discounts. There are always tradeoffs. Collaboration is key. The idea CPFR presents is that if information flows freely, suppliers and retailers can plan together to accomplish a shared mission.
RAY: I know that we as a supplier are hampered by shipping/freight. It is an enormous revenue drain, but free shipping/freight is what consumers and the industry expect. We need to meet with shipping/freight providers to discuss how we all can drive these costs down. We are using more and more of a POD model as a supply chain tool. Finding new ways to have SOD (supply on demand) is something we are exploring and goes beyond print.
TAYLOR: The biggest logistics problem is that stores return excess stock to their suppliers. This turns into a cost for everyone. I would love to see stores create a standard procedure of marking down excess inventory so that it sells. It doesn’t help the industry to have excess inventory in the publisher’s warehouse. Figure out how to sell that inventory in the store. Maybe the publisher and the retailer have to collaborate in eating the cost when the discounted price gets down to a certain level.
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Suppliers report the biggest marketing challenge is marketing and sell-through at brick-and-mortar retail stores. What are the current challenges here? How can retailers help suppliers better?
ADAMS: When we have such a massive amount of product coming from every company, it’s hard to make one stand out against the others. We do what we can to promote certain trusted authors, highlight up-and-coming authors, and at the same time, carry tried-and-true, frequently requested product. If advertising could direct people to come to their local Christian bookstore, that would be helpful. Another helpful item is advanced reader copies: if we know the product, we can sell it.
ALEXANDER: Retailers need to be the book source for their community. That level of authority comes through understanding the local community through real-time engagement through channels such as social media. By participating in local events, engaging with customers, and providing relevant content to their needs, suppliers can become part of the local community.
Brick-and-mortar stores can identify local trends and news by investing even just a modest amount of budget and bandwidth in social media. Participating in relevant communities online helps the brand resonate throughout the community.
COUEHY: Our hope would be that retailers would work with suppliers to better meet consumer needs instead of focusing on an item buy or low-cost price point as the primary strategy behind a wholesale purchase. If together we do a better job of understanding and meeting consumer needs, then we have a shot at improving our industry by building demand and increasing sell-through.
KENNETT: Once the product hits stores, forecasting can be tricky. We keep consumer demand in mind, but what directly impacts us is not what consumers are doing but what the retailer decides to do—and in the case of most independent retailers, without access to their POS data, we’re in the dark until we get an order. The same is true for online advertising or in-store shopper marketing. Being able to track success only with anecdotes or secondhand information proves nothing.
POTRATZ: Sales and traffic continue to be the biggest challenges in our industry. One of the best ways to drive traffic, help consumers discover new authors and products, and get products on the shelf is still the retail consumer catalog. Tracking and segmenting customer lists yields high catalog response rates. The key to effective promotion is first mailing the right customer at the right time—and also having the right product well merchandised in the store.
In many ways, Christian retailers still lead all industries in their ability to know their customers and market effectively to them. Digital promotions, including email and social media, add to catalog effectiveness and boost customer engagement.
RAY: In many cases, retailers have taken the marketing expertise of supplier products out of the suppliers’ hands. It appears that those retailers feel that they know their shopper in every way including purchasing patterns. Some retailers have forced suppliers to participate in cooperative advertising but haven’t given them any opportunity to speak into what or when it is advertised.
SMITH: The current challenges are that suppliers are spending deep dollars on marketing group flyers without sell through at the retail level. If your store belongs to a marketing group, the best help would be to be wise about purchasing in quantity and then hand sell what is in the flyer.
TAYLOR: Every person who walks into the store has to be helped to buy what he/she is looking for. We hear that a large proportion of customers who go in to buy a Bible walk out without a Bible. The store has absolutely dropped the ball. Make sure the customer’s need is being met.
Suppliers say the most profitable growth opportunities are consumer-direct sales, creating new retail sales channels, and maximizing existing retail sales channels. One growth option could be stores serving as fulfillment centers (buy online, pick up in-store or have product shipped to home; buy in-store, ship to home). How would suppliers and retailers work together on this?
ADAMS: We have a website that allows people to reserve an item online and then pick up in store. It is a little challenging on a small scale, so I cannot even imagine doing this on a large scale. We are in retail, not warehousing and shipping. If there are simple ways to accomplish this, we would certainly be open to looking at it, but the space and logistics of it don’t make sense to me right now.
HOGAN: We already employ online sales with ship-to-home and pick-up in store channels. If suppliers introduce direct online purchases and allow retailers to be the fulfillment center with free shipping to retailer, sales will probably increase as traffic will increase for retailers.
KENNETT: At Kerusso, we want to drive as much of our own growth as possible through relationships we already have. And yet, if growth is the goal you’ve really only got three options: 1) sell new stuff to the same people, 2) sell the same stuff to new people, or 3) sell new stuff to new people. In regards to fulfillment centers: I think it’s a novel idea, but I’m really not sure how it would play out. Storeowners want customers in their store, and the average online consumer wants the product delivered straight to their door. The order in-store, ship-to-home model could help retailers reduce inventory while also helping them become a part of the “long tail,” but I can see how that could get hairy on the supplier side, with suppliers having to function as DCs.
How can both retailers and suppliers strengthen the industry?
ADAMS: Perhaps if we all spoke a common language, it would be helpful. I know nothing of being a fulfillment center. I know nothing of “creating new retail sales channels.” So perhaps a list of industry terms.
We are all in this together. We are all in this for the same reason: to further the Kingdom of God. If we’re not, nothing we set out to do will work anyway. If we stay focused on the mission and Galatians 6:10, we can and will all succeed. God will honor our commitment to Him.
ALEXANDER: Speed to market is very important in today’s fast-paced environment. Retailers need to be relevant with suppliers and customers, and suppliers need to help retailers integrate with their local community. Consider, “What matters to your customers, your community?” Be involved and offer events, activities in your store. This might include partnering with organizations in the community for events, family days, or hosting author visits. Social media is a must-have strategy to stay connected to your community. Try reaching out to Christian bloggers and get their endorsements.
It’s a customer-first world. When both sides come together to understand and serve the needs of the customers, the industry will only flourish.
COUEHY What tightly held beliefs does your store have about serving the faith consumer? Does your store appeal to a broad range of consumers on a Christian faith continuum? Are you changing your product offering to appeal to Millennials? These are questions that DaySpring is asking itself. How do we more effectively serve the Christian faith consumer without changing or compromising our tightly held beliefs? Do some of our beliefs need to change as they reflect a “how we have done business” rather than “who we represent in Christ”?
HOGAN: Both sides must embrace cultural diversity and be able to address challenges being faced along with possible solutions.