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Md. small retailers diversify, innovate as they enter critical sales season

‘I’m just trying to get the word out there that I’m here,’ says Marcia Warnick, owner of the Cashmere Clothing Co. in Deep Creek Lake. (Submitted Photo)

‘I’m just trying to get the word out there that I’m here,’ says Marcia Warnick, owner of the Cashmere Clothing Co. in Deep Creek Lake. (Submitted Photo)

Reeling in customers at Cashmere Clothing Co., a 1½-year-old women’s apparel store near Deep Creek Lake, is difficult for Marcia Warnick.

Despite offering private and virtual shopping appointments, holiday specials, and weekly live streams, the business owner is struggling to get people in the door.

“I’m kind of off the beaten path,” Warnick said. “I’m just trying to get the word out there that I’m here.”

Across the state in Takoma Park, co-owner Jeff McCandless is offering personal shopping and extended sales at his women’s clothing store known as Amano.

Business at the nearly 23-year-old establishment is down about  50% year over year, but quality goods, a diverse product offering, and loyal customers are keeping the store afloat.

“It’s easy to come in and spend a couple hundred dollars and if you get six people in who spend that you’re treading water,” McCandless said.

Welcome to the holiday season for small retailers across Maryland, a time of uncertainty, stress, and anxiety for shop owners. What was once the most profitable time of the year now comes on the heels of months of declining revenues, business restrictions, and changing consumer preferences. Who survives is likely to be shaped by many financial, geographic, and circumstantial factors. Those who pivoted and diversified their business early are coming out on top.

This month, Gov. Larry Hogan moved to cap businesses at 50% capacity, following an uptick in COVID-19 cases statewide. Jurisdictions like Montgomery County and Baltimore city tightened restrictions to 25%, a change that’s crippling many already hard-hit establishments.

According to data from the National Retail Federation, holiday sales over the last five years accounted for  about 19 percent of annual retail sales nationwide. A recent study from Deloitte suggests retail sales will increase by 1% to 1.5% this season, compared to 4.1% during the same period last year, according to U.S. Census Bureau data.

The early birds

Businesses that kick-started e-commerce, upped social media campaigns, and spearheaded curbside pick-up four to six month ago are better situated this holiday season, said John Hickman, a regional director for the Maryland Small Business Development Center.

“If you’re just thinking the first of November that I got to build up a social media following or resurrect an email list, you’re too late,” said Hickman, who works with businesses along the Eastern region of the state.

This year, businesses also need to answer three fundamental questions, said Russell C. Teter III, a certified executive coach and facilitator: Who is spending money during the pandemic? What are their known problems? How do you communicate with potential customers?

“What every business needs to do is put a square peg in a round hole rapidly,” Teter said.

Nearly 98,000 businesses have closed permanently since the start of the pandemic, a September report from Yelp  found. As stricter pandemic-related safety measures cut back precious store space, success comes down to a strong and loyal customer base.

At Dice City Games, a hobby game store in Silver Spring, some loyal customers continue to frequent the roughly 1,400-square foot store, said owner Jimmy Cooney.

“When you’re into a hobby and you can’t talk to the people and engage with it, it’s easy to sit home and order on Amazon,” Cooney said. “If you’re not following us on Instagram or social media, you might not know that we now do delivery. I think that there’s a big obstacle small stores face of getting the word out to various customers.”

During a typical November, customers piled into the venue, purchasing games for friends, family, or avid collectors while weekly game night events prepandemic filled the store to capacity. This year, Cooney planned a store expansion, expecting sales to approach $1 million. Now, he said he’ll be lucky to rake in about a third of last year’s sales.

Like other businesses, Cooney began showcasing products via Instagram and offering raffles to engage customers. He installed several hand sanitizer stations, a new air filtration system, and he plans on opening the store an extra few hours to spread out shopping during the Black Friday rush.

New revenue streams

Diversifying the business model and finding new revenue streams is key to luring customers and offering value, said Garrett Glover, a retail and restaurant specialist at SBDC.

Glover works closely with merchants across Maryland, a majority of whom report year-over-year growth in sales, a feat reached by simply diversifying their business and finding new revenue streams to compensate for the loss in walk-in traffic.

One client, a gift shop owner in Chestertown, capitalized on her style sense and converted her space to a base for personal interior decorating services. She’s developed a list of regular clients.

Sisters and co-owners of SW7, Margaret Curry & Catherine Heffley, at their Kensington contemporary gift shop. (Submitted Photo)

Sisters and co-owners of SW7, Margaret Curry & Catherine Heffley, at their Kensington contemporary gift shop. (Submitted Photo)

“If you’re a gift shop and nothing more and there’s no pedestrian traffic to support your business in the community, you’re almost dead in the water,” Glover said.

A recent study from Google suggests that about 66% of consumers plan to shop more at local retailers this season. Amid the pandemic, organizations and lawmakers statewide have urged residents to support their community businesses. Last month, Maryland Comptroller Peter Franchot kick-started the annual Shop Maryland for the Holidays, which partners with credit unions offering rewards to members that participate.

At her Laytonsville-based store known as The Family Room –– a space that once hosted puzzle tables and community gatherings ––– Corinne Glab is witnessing the payoff. Customers flock to the store for everything from eggs to unique holiday gifts.

“They have been so supportive,” said Glab, who co-owns the store with her mother. “They’re getting inundated with requests to support small businesses, but they’ve really come out to do that.”

The right product

As consumer preferences shift to sweatpants over dress pants, businesses that can hone in on the products consumers need and want will come out on top, said Wendy Bolger, director of Loyola University Maryland’s Center for Innovation & Entrepreneurship.

“Who’s figured out what we need, who is providing the most value for a very changed landscape,” Bolger said. “The right product certainly still has a market.”

For Catherine Heffley, co-owner of SW7, a Kensington-based contemporary gift shop that opened just a few months before the pandemic, this includes offering local artwork and handmade gifts.

“We tried to find unique and creative gifts to offer our customers that are not either sold on Amazon or the big stores,” Heffley said. “We’re trying hard to cultivate a group of items that people don’t see anywhere else.”

Heffley and her sister operate the roughly 500-square foot shop. For larger businesses, finding reliable staffing and employees who are comfortable working under pandemic conditions is difficult, Bolger said.

And supply chain problems and shortages as factories shutter or operate at limited capacity means businesses are left with additional headaches, she added.

“For most businesses, it’s the biggest time of the year and you have to be prepared to really scale up,” Bolger said. “I’m not sure that’s something folks are ready to do.”

Despite the uncertainty, McCandless hopes to make it through the pandemic and one day pass along his business to his daughter.

He’s already started merchandise orders for the spring and began pushing products online, all while strategically stocking shelves in the store as the holidays approach.

“Those are the daily decisions you have to make,” McCandless said. “How much are you going to commit to? We have a lot of unknowns in the spring.”

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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