Colleen Tuxworth Masterclass

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  • Colleen Tuxworth Masterclass

    1. 1. Masterclass / Skill Session: Meeting Room 4 Retail in Museums and Galleries - Merchandise Planning, Purchasing and Production Colleen Tuxworth Principal, Cultural Retail
    2. 2. Retail in Museums and Galleries - Merchandise planning, purchasing, and production Colleen Tuxworth – CULTURAL RETAIL M&GSQ State Conference, August 2011
    3. 3. Wish list for your shop
    4. 4. ROLE OF RETAIL IN MUSEUMS & GALLERIES - commercial & community asset <ul><li>Educational extension of the institution </li></ul><ul><li>Enhances the visitor experience </li></ul><ul><li>Promotes the gallery/museum through the sale of exhibition and collection related merchandise </li></ul><ul><li>Generating income (e.g. for council and the further development of programs for the gallery/museum) </li></ul><ul><li>Supports local artists and the community </li></ul><ul><li>Attracts new visitors </li></ul><ul><li>Often complicated – for-profit component of a </li></ul><ul><li>non-profit institution </li></ul>
    5. 5. MERCHANDISE PLANNING <ul><li>A Merchandise Plan: </li></ul><ul><li>Defines goals and objectives </li></ul><ul><li>Clearly communicates strategies </li></ul><ul><li>Means of determining and allocating resources, </li></ul><ul><li>especially budgets </li></ul><ul><li>Coordinates operations </li></ul><ul><li>Measures performance </li></ul><ul><li>Plans for the future (can learn from the past) </li></ul><ul><li>Should be composed of narrative and financial guidelines </li></ul>
    6. 6. MERCHANDISE PLANNING <ul><li>STEP 1 - MISSION STATEMENT </li></ul><ul><li>A Mission Statement communicates to others and keeps you focused on the purpose of the shop </li></ul><ul><li>The Merchandise Plan follows logically from the mission statement </li></ul><ul><li>Seek approval/awareness of your mission statement </li></ul><ul><li>Seek to work with other staff from your institution to help achieve the objectives of the shop </li></ul>
    7. 7. <ul><li>STEP 2 – MERCHANDISE PHILOSOPHY </li></ul><ul><li>The shop’s merchandise should reflect the purpose </li></ul><ul><li>and reputation of the parent institution and enhance </li></ul><ul><li>the visitor experience. </li></ul><ul><li>The shop’s merchandise should relate to: </li></ul><ul><ul><li>The gallery/museum’s: </li></ul></ul><ul><ul><ul><li>Collection and themes </li></ul></ul></ul><ul><ul><ul><li>Reputation </li></ul></ul></ul><ul><ul><ul><li>Visitors </li></ul></ul></ul><ul><ul><li>The shop’s: </li></ul></ul><ul><ul><ul><li>Intended target customer </li></ul></ul></ul><ul><ul><ul><li>Pricing policy </li></ul></ul></ul><ul><ul><ul><li>Concept and size </li></ul></ul></ul>
    8. 8. <ul><li>STEP 3 – OUTLINE MERCHANDISE DEPARTMENTS YOU (PLAN TO) STOCK </li></ul><ul><li>2007 MSAA Benchmarking Report </li></ul>
    9. 9. <ul><li>Report findings: </li></ul><ul><li>Council owned institutions have Cards as their biggest selling item </li></ul><ul><li>Regionally located shops have Cards as a bigger seller than city shops </li></ul><ul><li>Even though Books were the biggest selling department for most shops, this was not always the case for galleries who reported Cards as big sellers </li></ul><ul><li>For museums, after Books, items individual to their museum were the next best sellers </li></ul>
    10. 10. <ul><li>Maximum of approx. 10 Departments </li></ul><ul><li>The classification of Departments directly impacts on reporting and can also be a guide to where the merchandise is located in the shop. </li></ul><ul><li>Typical Department descriptions: </li></ul>Books Multi media Cards Gifts Branded/Custom Homewares Souvenirs Jewellery Toys & Educational Special Exhibition Apparel Fossils & gemstones Poster & Prints Consignment
    11. 11. <ul><li>Include any additional narrative to further explain philosophies and purchasing guidelines </li></ul><ul><li>STEP 4 – IDENTIFY CATEGORIES (& Sub-categories) WITHIN EACH DEPARTMENT </li></ul><ul><li>Where possible, describe how Categories relate to or enhance the themes of the museum/gallery. This is usual for Books. </li></ul><ul><li>The level of classification for Categories is dependent on the level of reporting required, and assists staff in locating merchandise. </li></ul><ul><li>e.g. Adult Books / Children’s Books </li></ul>
    12. 12. <ul><li>STEP 5 – PROJECT AN ESTIMATION OF TOTAL SALES </li></ul><ul><li>Example: Art Gallery Shop with budgeted annual sales of $25,000 </li></ul>Department % of total Sales $ total Gross Profit Margin % Gross Profit $ % of Gross Profit Exhibition guides 20 $ 5,000 40 $2,000 16% Cards 25 $ 6,250 52 $3,250 27% Gallery Branded 15 $ 3,750 60 $2,250 19% Gifts (inc. Jewellery) 10 $ 2,500 48 $1,200 10% Souvenirs 5 $ 1,250 53 $ 663 5% Toys & Activity Kits 15 $ 3,750 58 $2,175 18% Consignment 10 $ 2,500 25 $ 625 5% $12,163
    13. 13. <ul><li>STEP 6 – PROJECT KEY PERFORMANCE TARGETS </li></ul><ul><li>KPIs for gallery and museum shops: </li></ul><ul><li>- Spend per visitor </li></ul><ul><li>- Spend per customer </li></ul><ul><li>- Conversion of visitors to customers </li></ul><ul><li>- Stock turn </li></ul><ul><li>Should have POS and inventory systems to measure and evaluate sales performance. </li></ul><ul><li>Spend per visitor is a crucial KPI as it links sales performance to visitation – most institutions are dependent on visitors for customers. </li></ul>
    14. 14. PURCHASING PRODUCTS THAT SELL <ul><li>Customers: </li></ul><ul><li>- selective and informed </li></ul><ul><li>pay more for innovation and exclusivity </li></ul><ul><li>more demanding </li></ul><ul><li>Understand visitor demographic </li></ul><ul><li>Identify segments of customer types within demographic </li></ul><ul><li>Find products for customers Vs finding customers for products </li></ul>
    15. 15. <ul><li>The Emotional Experience </li></ul><ul><li>Museums and galleries: </li></ul><ul><li>- rich in emotional and personal experiences, nostalgia and history </li></ul><ul><li>Museum and gallery shops: </li></ul><ul><li>- assist in connections with the emotional brand of the institution </li></ul><ul><li>Connect products to customers’ motivational buying decisions: </li></ul><ul><li>- memento </li></ul><ul><li>- impulse </li></ul><ul><li>- collector </li></ul>
    16. 16. DETERMINING PRODUCTS THE CUSTOMER WANTS TO BUY <ul><li>Being on the shop floor - observe and listen to customers </li></ul><ul><li>Ask staff to document comments and questions from customers (e.g. “ideas book). </li></ul><ul><li>Look for trends and repeated comments to inform purchasing plans </li></ul><ul><li>Ask customers direct questions. Ask as many customers as possible the same question/s over a short timeframe, </li></ul><ul><li>e.g. “How do you like our selection of postcards?” </li></ul><ul><li>Record answers </li></ul><ul><li>Customer surveys – exit surveys should be conducted when buying experience is completed. </li></ul><ul><li>Survey should be directed primarily at customers who bought little or nothing </li></ul>
    17. 17. <ul><li>Product trends for museum and gallery shops </li></ul><ul><li>Museum/gallery branded </li></ul><ul><li>Unique and innovative </li></ul><ul><li>Children’s products </li></ul><ul><li>Locally made </li></ul><ul><li>Ethical </li></ul><ul><li>Environmentally friendly, “green” </li></ul>
    18. 18. <ul><li>METHODS OF PURCHASING </li></ul><ul><li>By instinct </li></ul><ul><li>By personal taste </li></ul><ul><li>When out of stock </li></ul><ul><li>Customer requests </li></ul><ul><li>For exhibitions, public programs or promotional events </li></ul><ul><li>Seasonal events </li></ul><ul><li>Sales history </li></ul><ul><li>Sales based on visitor projections </li></ul><ul><li>By supplier, sales reps </li></ul><ul><li>Gift and trade fairs </li></ul><ul><li>Staff suggestions </li></ul><ul><li>Expenditure budgets </li></ul><ul><li>Ideas from other shops </li></ul>
    19. 19. CONSIGNMENT MERCHANDISE <ul><li>Broadens merchandise mix without extra expenditure </li></ul><ul><li>Reduces risk of new product lines and artistic merchandise </li></ul><ul><li>Remains property of the supplier until sold </li></ul><ul><li>Revenue - is the commission enough to justify the expense of displaying the items, amount of shelf space etc? </li></ul><ul><li>Insurance – liability for loss or damage to the consignment property </li></ul><ul><li>Inventory management system – need for efficient processes to record sales and produce accurate reports </li></ul><ul><li>Agreement: </li></ul><ul><li>Highly advisable - written agreement in the form of a contract, confirmation letter and/or official order form </li></ul><ul><li>States product description, quantity, agreed price/commission, period of agreement, shipping costs (for return of unsold items) </li></ul>
    20. 20. PRICING POLICY & STRATEGIES <ul><li>Set the price BEFORE YOU PLACE THE ORDER !!! </li></ul><ul><li>MARGINS AND MARK-UPS </li></ul><ul><li>Don’t assume margin should be the same across all </li></ul><ul><li>categories. </li></ul><ul><li>Consider mark-up item by item: </li></ul><ul><li>Lower priced items - usually accommodate higher mark-up </li></ul><ul><li>More common products - usually a standard mark-up </li></ul><ul><li>Museum/gallery developed and unique merchandise - usually support higher mark-up </li></ul><ul><li>Expensive merchandise may benefit from lower mark-up </li></ul>
    21. 21. <ul><li>MARGINS AND MARK-UPS …. What’s the difference?? </li></ul><ul><li>Let’s say: </li></ul><ul><ul><li>you have a new product which cost $10 to buy </li></ul></ul><ul><ul><li>you need to make 40% in order to break even </li></ul></ul><ul><li>Q: How much do you sell the product for? </li></ul><ul><li>A: $16.70! </li></ul><ul><ul><li>A profit of $6.70 on $16.70 sale price, margin = 40% </li></ul></ul><ul><ul><li>If you said $14.00, margin reduced to 29%! </li></ul></ul>
    22. 22. <ul><li>Marg in - a percentage of the sell in g price. </li></ul><ul><li>It tells what percentage profit you’ve made on a sale, before taking other costs into account: </li></ul><ul><li>Mark-up - a percentage of cost price. </li></ul><ul><li>It’s the amount that you add to the cost of an item to reach its selling price: </li></ul>Margin = Gross Profit x 100 Sales Markup = Gross Profit x 100 Cost
    23. 23. PRICING STRATEGIES: <ul><li>Keystoning – doubling the wholesale cost to arrive at retail price. Usually not a sufficient mark-up to cover associated costs of processing, shipping etc </li></ul><ul><li>Skimming – starting with high prices and bringing them down over time. Advantage - capturing sales from high-value customers who cannot wait for a lower price. </li></ul><ul><li>Penetration – starting out with a low price to capture market share quickly. Works best with high repeat-purchase rates. Profitability depends on high volume sales. </li></ul>
    24. 24. PRODUCT DEVELOPMENT
    25. 25. PRODUCT DEVELOPMENT <ul><li>Make sure you have copyright permissions </li></ul><ul><li>Work with your curators and image department as to what objects or artworks can be used - are there already suitable images that can be used? </li></ul><ul><li>Decide on images or design themes that will have most appeal. Make sure images work for product formats. Avoid using just logos - products can look too corporate and usually have limited sales success. </li></ul><ul><li>Prepare a budget: </li></ul><ul><li>Obtain quotes for printing/production – include all costs: </li></ul><ul><li>artwork design, set-up, packaging & freight </li></ul><ul><li>Estimate order quantities to secure a reasonable cost per item </li></ul><ul><li>Set a sell price that includes all costs and achieves a target GPM </li></ul><ul><li>RCAG Branded Merch Costs Example.xls </li></ul><ul><li>If the selling price is unreasonable – end the project! </li></ul>
    26. 26. PRODUCT DEVELOPMENT <ul><li>Prepare a schedule outlining the various stages of the project. Set realistic deadlines: </li></ul><ul><li>Finalising artwork </li></ul><ul><li>Receiving samples </li></ul><ul><li>Final approval </li></ul><ul><li>Production </li></ul><ul><li>Delivery </li></ul><ul><li>Select designer (in-house/external), who can understand and interpret your corporate style and themes, and also who can meet deadlines. Most suppliers will provide design work as part of set-up costs. </li></ul><ul><li>Gain approval for product and packaging design from your internal departments such as marketing/curatorial/director. Check image credits and logos are correct. </li></ul>
    27. 27. <ul><li>Redcliffe City Art Gallery merchandise </li></ul><ul><li>Magnets </li></ul><ul><li>Bookmarks </li></ul><ul><li>Pocket mirrors </li></ul>
    28. 28. PRODUCT DEVELOPMENT <ul><li>Keep in close contact with designers and manufacturers. Ask for as many proofs and samples as required to ensure you are happy with final product and for showing other staff/departments. </li></ul><ul><li>Promote and display new product(s)!! </li></ul><ul><li>Closely monitor sales performance, and gain customer feedback to inform future product development decisions. </li></ul>
    29. 29. PRODUCT DEVELOPMENT <ul><li>Commissioning products </li></ul><ul><li>Another option is to commission artists or suppliers to create products unique to your shop and gallery/museum themes. </li></ul><ul><li>Have a Commissioned Product Agreement clearly stating </li></ul><ul><li>- Terms & Conditions, including </li></ul><ul><ul><li>Minimum order quantity (or value) </li></ul></ul><ul><ul><li>Design fees </li></ul></ul><ul><ul><li>Production time </li></ul></ul><ul><ul><li>Terms for repeat orders </li></ul></ul><ul><li>  - Schedule, including </li></ul><ul><ul><li>Product (description/specifications) </li></ul></ul><ul><ul><li>Design brief </li></ul></ul><ul><ul><li>Origin (location of manufacture) </li></ul></ul>
    30. 30. <ul><li>Yarra Ranges Regional Museum (Victoria) </li></ul><ul><li> www.polli.com.au </li></ul><ul><li>www.lumbi.com.au </li></ul>
    31. 31. MSAA – MUSEUM SHOPS ASSOCIATION OF AUSTRALIA <ul><li>www.museumshops.org.au </li></ul><ul><li>Preferred supplier scheme </li></ul><ul><li>Information, assistance and professional development </li></ul><ul><li>Networking opportunities with similar institutions </li></ul>
    32. 32. In Conclusion: <ul><li>Merchandise plan – essential tool for your shop, no matter what size! </li></ul><ul><li>Foster support within your institution </li></ul><ul><li>Review and revise regularly </li></ul><ul><li>Remember to tell your customers where the money goes! </li></ul><ul><li>??? QUESTIONS ??? </li></ul>

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