Coping with the haunting realities of business seasonality

Most businesses operate in cycles – from specific holidays like Halloween and Christmas to school holidays or the changing seasons. Costume retailer Dawn Menke shares her strategies for surviving the fluctuating sales cycle in her business.

As the operator of costume retailer Delta’s Dazzling Costumes, Dawn Menke knows more than most about the effects of seasonality on a business. And as the company has grown strongly since launching more than a decade ago, it’s clear that her strategies for managing seasonal changes are working.

Dawn speaks with My Business about these strategies, what she finds most challenging about balancing an online business with a retail store, and why she doesn’t want to aggressively grow her business.

My Business: Can you give us a brief overview of the business?

Dawn Menke: I joined eBay in 2003; it was just after my first child was born, and I didn't want to go back to work, I preferred to stay at home. I was talking to some friends about how they buy toys for their kids, and they were so expensive and they would only last for a couple of months.The staff of Delta's Dazzling Costumes

One of them asked me about eBay – she said 'Why don't you buy it second-hand on eBay? You'll get it a lot cheaper'. So I got on eBay and I saw that toys that were $60 in Kmart were selling for $40 on eBay second-hand, so I thought I would buy it brand new [from a supplier] and then sell it myself.

I just started selling second-hand stuff, and then I started going to toy fairs and gift shows and got an ABN, and then I brought in some costumes to complement the toys that I had for kids … and they sold well, and then I thought I'd try adult ones and they sold well, so then I decided to change the whole business over to costumes.

I started off as Delta's Dazzling Deals, and I sold everything and anything – gifts, babywear, all that sort of stuff – and then we went to Delta's Dazzling Costumes.

MB: Was it daunting to change focus and go against what you had been doing?

DM: No, not at all. Not a lot of people were doing costumes and accessories in Australia, and if you wanted to buy anything, you had to basically buy it overseas and hope that they shipped to here. So I just kept growing and growing the costumes and the accessories, and just wiped out everything else, because I didn't want to confuse the customer with so many different things.

MB: Do you still sell on eBay as well as through your own site?

DM: Yes. My main goal was to get off eBay because at the start, to sell on eBay was almost embarrassing, and suppliers would not supply to you at all, because eBay was all about selling second-hand items and auctions. I wanted to get my own website so I could be more professional.

[However] I eventually realised when I got my own website and had to pay Google fees and all that sort of stuff that eBay was [actually] more profitable … because you just pay 10 per cent eBay fees whereas when you have your own website, there are so much more outgoings.

MB: Do you find that a lot of customers go between the two sites to compare the best deal?

DM: Yes they do. If someone asks if we can do a discount or something via eBay, then we'll [tell them to] go to our website and we're having a sale. But when people sign up on eBay, they end up becoming part of our promotional letters that go out, so they end up going to our website and buying from our website.

"The feedback was 'Do you have a store?'; all emails were like 'Do you have a store? I want to come into the store'. So we listened to them."

MB: Do you sell solely online?

DM: We've got a shop. When I first opened [our warehouse] there'd be knocks on the roller door and there would be customers wanting to come in and buy costumes. And the feedback was 'Do you have a store?'; all emails were like 'Do you have a store? I want to come into the store'. So we listened to them.

Our shop is located at Southport on the Gold Coast, and it is probably the biggest costume shop on the Gold Coast. It's pretty big – when people walk in, they all go 'wow'. The back is our warehouse, and we pick and pack our stuff from the aisles – we've got about eight aisles.

MB: Have you ever thought about opening more stores – given the demand for a physical presence?

DM: I thought about that; we thought about doing one in Brisbane. But I've got a young family and I'm happy with where we're at at the moment. Halloween is taking all my time away from my family every year. And it's your own business, so you tend to work a lot more hours. First thing when I get up and get a coffee, I have to go and do the banking, see what the sales are and things like that.

I wouldn't have a life, so no, I don't want to get any bigger. But there is [scope] out there to do it.

"I always pay as I go, everything is paid for, so in the slow months ... I don't owe any suppliers for any stock."

MB: How do you manage the seasonality in your business?

DM: Our slow time is basically school holidays. Whenever it's school holidays, especially January and February is really, really slow; as soon as Christmas Eve hits, that's when we slow down. But then whenever everybody goes back to school and back to work, mid-February, you've got Valentine's Day, then you've got St Patrick's Day, Easter, Book Week, Talk Like a Pirate Day, zombie walks.

So basically everybody knows that we're slow, so most of my staff take holidays in January for the whole month of January. The shop still goes, so we probably go down to three staff, and they take in turns of swapping who has Christmas off.

I always pay as I go, everything is paid for, so in the slow months everything is all paid for – I don't owe any suppliers for any stock, I own the whole lot.

I did do 30-day accounts, but I would rather just pay as I go so I've got control of what the outgoings are and the incomings. So January and February are the slowest, and then it builds up again and it gets bigger and bigger and it just explodes at Halloween.

MB: You have 10 employees working full-time and you can have up to 20 in total during peak periods, is that right?

DM: Most definitely. Sometimes we have to work seven days [a week] over the peak season, and also we'll have to do a night shift as well, because if we want to change something around in the shop, we can't do it during the day because of customers.

And when I put people on for Halloween, I basically say it's a seven-day roster, casual, and we drop off come Halloween.

But come Christmas, that's when we really drop off, and there's basically no work for nearly two months, and so … I just let all the staff know that it's going to be long hours and make sure that they are available over seven-day rosters, and most people are excited to work with costumes.

MB: Do you buy in bulk and then add your margin before reselling?

Dawn Menke, owner of Delta's Dazzling CostumesDM: I have stock that turns over, I place orders every day, and I go to America – they have a Halloween trade show in January every year, so I will buy bulk containers when I've been to the States.

But mainly Australia has just grown so big with costumes and suppliers, and we've got more suppliers than costumes now, so I just go straight to the suppliers and we have the stock turning over all the time, so I don't order in bulk any more.

MB: How do you choose your suppliers?

DM: [Our suppliers sell] fully licensed products – they are licensed costumes.

I've found that ... people want licensed products; they want to look like Harley Quinn, they want to look like Wonder Woman and Superman, so that's how I basically choose.

And [we avoid] suppliers that aren't growing as well and moving with the times and getting new stock.

MB: We have to ask: what is the most popular costume?

DM: The most popular costume is Harley Quinn and The Joker from Suicide Squad – anything to do with Harley Quinn is huge, down to the tattoos, to the jewellery; that's the most popular one at the moment!

Fast facts:

Business: Delta's Dazzling Costumes

Industry: Retail

Location: Gold Coast, Qld

Established: Trading since 2003, current name since 2006

Employees: 10 full-time and approx. 10 additional casuals during peak periods

 

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