Special Report: Tips For Adult Retailers

Joanne Cachapero
AUBURN, Wash. — In “Building Buzz to Beat the Big Boys: Word of Mouth Marketing for Small Businesses,” a recent book by Steve O’Leary and Kim Sheehan (Praeger Publishers), the authors give tips on how small retail business can weather difficult economic times by using smart retailing tactics to keep customers in the mood to shop.

Since founding adult retailer/wholesaler Peekay, Inc., the parent company of Lover’s Package, A Touch of Romance and Condom Revolution stores, in 1980, owner Phyllis Heppenstall has seen a lot of changes in the adult product marketplace. XBIZ asked her opinion on some of the tips in “Building Buzz …” and suggestions for how she encourages sales in the company’s 37 storefronts located throughout Washington State and California.

“The number one thing that I say, when people ask me about my business,” Heppenstall told XBIZ, “I say look — I’ve been in stores for 27 years and I do not want to be known as an adult store. I want to be known because I’m a great retailer. So, to me, the practices of running a store and good business practices, in the past, many adult stores haven’t done because it was ‘build the store, and they will come.’”

However in an increasingly competitive market, Heppenstall agrees with O’Leary and Sheehan agree that there is increased need for storeowners to be diligent in analyzing their income and outgoing expenses, in terms of advertising and stocking inventory.

While the authors stress advertising to maintain market share, Heppenstall said that her advertising budget averages somewhere between two to four percent of sales — and if sales decline, so does the amount available for advertising.

Heppenstall said that she believes that in-store promotions can be an effective way to make up for decreased advertising, which is pointed out in a tip from “Building Buzz” — focus on existing customers. In several of Peekay’s stores, the company promotes Tantalizing Tuesdays, when customers can come and receive free giveaways, as well as special promotional demonstrations and discounts.

“What we do is we beef up our-in-house events. We’ll want to reach more customers to get them into the stores and you can do that by hosting store events” Heppenstall said.

“We have a preferred customer program that is absolutely free for the customers to sign up,” she also pointed out, citing that adult retailers must be more discreet with direct advertising to customers, than a mainstream retailer.

“We deal with a lot of sensitive product — we have our own way of acknowledging our customers, and by the same token, we have a loyalty program, and we don’t do mailers to those people, so they know that we’re not going to call them or send them anything,” Heppenstall said. “The benefits of the loyalty program are more centered around free gift-wrapping, or treats that they get for shopping.”

Those treats and enticements are another point made by O’Leary and Sheehan, who said that storeowners should “think about what you might offer your customers as a special, one-time discount on a treat to get people in your store.”

Heppenstall also suggest working closely with vendors to create in-store promotional specials.

“I always encourage people to work with their vendors as much as they can, especially new vendors,” she said. “We’ve got them knocking on the door, every day of the week, that want shelf space. Well, if you want shelf space, I have to take something off, right? So what’s our incentive to do that?”

Another aspect of creating sales often overlooked by adult retailers is offering sale prices, especially on product that may be slow to move off the shelves.

“You need to control your inventory,” Heppenstall said. “You need to look at first-in and first-out, and if something isn’t selling, you need to free up those dollars and get something that will. If you can’t manage your inventory, I just don’t think it’s a successful retail business.”

Another idea offered by O’Leary and Sheehan is for retailers to team up with local nonprofits, to host special events benefiting charity organizations.

Peekay has sponsored events with local Chambers of Commerce, support fundraisers like AIDS Walk, and all Peekay stores give away free condoms to anyone who asks. But in difficult economic times, Heppenstall feels that retailers may cut back on donations as a way to trim their budgets.

So, while adult entertainment has often been referred to as an “inflation proof” business, Heppenstall cites higher fuel prices and an overall slowdown in the economy for a downturn in sales.

“This is the first time in 27 years, starting last year, that we have really felt any affects of what I would call recession,” Heppenstall said. “Times of recession have always been good for us, because I always say that people may give up a trip, but they won’t give up coming in and buying a $49 package. Small pleasures people just won’t give up and that has historically been true.

“However, this time, I think the effect is that, because we are mostly a destination store, gas prices have hurt the special trips,” she added. “We see a lesser percent of gain in California and the Washington State economy seems a little stronger.”