Serious Selling: How To Turn Souvenir Sales into Merchandising That Makes Money

By Cheryl A. Ossola

Walk into any dance venue at showtime and you’ll see a table or two stacked with logo-stamped tees and sweats, maybe some mouse pads and water bottles. Or there might be a cramped gift shop, its goods stacked and boxed or sequestered behind glass, with a few featured items flapping on hangars. Sales from such endeavors rarely amount to much in the way of profits. But with creativity, resourcefulness, and commitment, performing-arts organizations can turn merchandising into serious money.

Case in point: San Francisco Ballet, whose Ballet Shop (located in the historic War Memorial Opera House), online store, and touring mini-shops brought in $590,968, or 2.7 percent of the company’s annual earned revenue for fiscal year 2012. During the 30-performance run of Nutcracker, the shop typically brings in about $375,000, an average of $12,500 per performance. A lobby kiosk averages another $1,000 per show. And during the four-month repertory season, the shop generates about $170,000, an average of $3,000 per performance.

Unlike contractor-run shops that take a percentage of sales profits, the shop is SF Ballet’s baby, which means 100 percent of its earnings stay in-house. And San Francisco Ballet patrons know that by shopping at a performance, they’re getting distinctive, high-quality merchandise they can’t get elsewhere, with the added perk of supporting the company they love.ballet patrons know that. By shopping at a performance, they’re getting
distinctive, high-quality merchandise they can’t get elsewhere, with the
added perk of supporting the company they love.

Valerie Megas, SF Ballet’s senior manager of retail operations, is in charge of making those significant numbers happen. With a background in product development, she stepped into the role 12 years ago and made huge changes. “When I started, I think the gross revenue was $300,000, and now it’s around $600,000,” she says. “I expanded the apparel line because I started designing it. I’m very particular about what we put our brand on, so we don’t have a lot of branded merchandise. But what we do have, aside from the apparel [such items as umbrellas, water bottles, key chains, and wallets], is nice. It’s not something you would get at a corporate giveaway. It’s tastefully done and it’s useful.”

Megas’ priorities are clear-cut — and few. “It’s important to me that the shop bring in a good amount of revenue,” she says. “But it’s also important that our patrons have fun, that they like what they see and find things they can’t find elsewhere. And it’s very important that we promote our brand.” Logo apparel is a top seller during the repertory season, as is the jewelry, priced from $12 to $200, “so everybody can afford something,” says Megas. During Nutcracker, Christmas ornaments and nutcrackers outsell everything else. A recent sales breakdown yielded the following items sold during Nutcracker and the repertory season (a total of about 90 performances): 5,400 ornaments; 4,600 nutcrackers; 2,200 pieces of jewelry; 1,300 items of logo apparel; and 1,300 plush toys.

But a high sales volume happens by design, not by accident. Top-quality merchandise is a must, and equally important is its presentation — the merchandising equivalent of real estate’s top three attributes: location, location, location.

One look at the Ballet Shop is all it takes to understand that Megas adopts the same standards of quality and aesthetics that artistic director and principal choreographer Helgi Tomasson brings to SF Ballet. “Valerie combines a very shrewd business sense with an excellent artistic sense,” says the shop’s manager, Laura Eklund, who has worked with Megas seasonally during Nutcracker for 10 years. “It’s not about what can we get in here for maximum profit, which could be complete junk; she’s looking at the artistic side as well. On the other hand, someone who is just looking at the artistic side probably isn’t making the same amount of money. So that’s a key combination.”

Megas has full control over the shop’s merchandise. “It’s all about what I think is going to sell,” she says. “The people who buy in the shop like nice things, but they don’t want to spend a lot of money. They’re not naïve; they know the value of merchandise. So I need to be careful that what I bring in is tasteful. It’s cool and edgy, but not too edgy; and it’s well priced, because I want to be competitive with department stores. I want people to leave the shop thinking, ‘I got this really cool scarf that I haven’t seen anywhere else, and I only paid 40 bucks for it.’ That gets them coming back for more.”

The in-demand logowear is custom made in Los Angeles. “It’s all ours and you can’t find it anywhere else,” says Megas, adding that women come back every year for new styles, or to replenish items that are carried over from season to season. The top sellers? A scoop-neck tee and yoga pants. The cuts and fabrics of all the apparel are good enough to wear on the street, important to SF Ballet’s brand visibility.

The jewelry, a big seller, is amassed on an annual buying trip to Europe. “I could tell you horror stories about where I have to go in Paris to find some really inexpensive jewelry,” Megas says. “It’s not pleasant. But I do it because I know what the margin’s going to be.” To keep customers coming back week after week, she buys only two or three of each piece.

For Nutcracker, each year Megas and Eklund go to the GiftCenter & JewelryMart in San Francisco, where they spend upward of $100,000. By now they know what sells well, what’s too fragile to bother with (they factor in 3 or 4 percent for losses, in breakage and theft), and what ranks high on a little girl’s “adorable” scale. In addition, the company has three custom-designed nutcrackers — Clara, the Mouse King, and the Nutcracker Prince. During the repertory season, less of the merchandise (roughly 20 percent) is geared toward children.

As for SF Ballet’s tours, Megas takes only the logo merchandise with her. “It’s important for the company to have a retail presence wherever they go, whether it’s Europe or here,” she says. “We set up a whole shop; it looks like a boutique.”

And that brings up the essential matter of presentation. What Megas strives for is “a sense of the fanciful” — a boutique atmosphere with merchandise that’s dazzlingly displayed, tempting everyone and excluding no one. That means, Megas says, “things aren’t under glass; they’re out in the open and accessible. And everybody can find something they can afford.”

The common practice of stacking merchandise, displaying it in the original packaging, or tucking it away behind glass sends the message to shoppers that they are in an ordinary gift shop. And being perceived as ordinary is certainly not SF Ballet’s goal. For that reason, stock items are removed from their packaging and displayed creatively, and branded SF Ballet tags replace the originals (except on high-end items that need justification for their price). “It’s not that we’re trying to be secretive about the sources; it’s more an extension of the company’s marketing,” says Eklund. She acknowledges that many arts organizations don’t have the time or manpower to revamp all that packaging. That’s where volunteers come in, she says. “They’re with us all summer, removing tags and putting new ones on. It’s very, very time consuming.”

Presentation, of course, has its challenges, primarily of time and space. Like most theaters, the Opera House wasn’t designed with a shop in mind. SF Ballet’s shop is housed in a mezzanine — a walk-through area that limits options for display (but, on the positive side, brings a certain amount of traffic). Strict rules regarding signage and use of the walls in this historic building also limit options for display, as well as for advertising and lighting. During Nutcracker, the shop outgrew the mezzanine, so Megas crunched numbers and got permission to expand into a neighboring donors’ lounge. She proved, says Eklund, that “it would be a better use of the space during Nutcracker, instead of holding two donor events, to have 30 shop events, so to speak.”

Since the Ballet Shop operates only on performance days, there are time constraints that affect retail performance. During Nutcracker the shop is open for roughly an hour and a half: 30 minutes before and after the show, and during a 20-minute intermission. During the repertory season, that post-show half-hour is limited to weekend matinees. And because SF Ballet shares the building with San Francisco Opera, Megas doesn’t have the luxury of a permanent shop. Every year she and her volunteers break down the Ballet Shop so the Opera can move in, and then set it up again before Nutcracker opens. That means an investment in the space needed to store and process merchandise during the off-season.

The word “investment” brings up a point that Megas believes is often overlooked by arts organizations hoping to develop serious retail revenue: there must be company buy-in, an investment of time, money, and resources that allows merchandising to reach its potential. To run a successful retail program, there must be buy-in from the dance company, an investment of time, money, and resources that allows merchandising to reach its potential. That includes providing space and a sufficient budget for inventory and part-time staff. More important, it includes authorizing the IT department to develop a fast point-of-sale system for the shop — and keep it updated. That kind of support, says Megas, “is key. We don’t have volunteers at the register. We don’t have volunteers in key positions. We put money into the staff and into the IT team. That’s a huge part of this business.”

What’s most important is recognizing that successful arts-organization merchandising isn’t a one-person show, even when that person is as visionary and business-savvy as Megas. A shop that delivers big-time in terms of revenue, branding, and company image requires complete buy-in from the company’s artistic, administration, and finance departments. And that’s the biggest underlying reason for the SF Ballet Shop’s success. “I have the support of everybody in this company,” Megas says, “and it’s full support.”

Editor’s note: For Six Steps to Retail Success, continue here.

Cheryl A. Ossola is a writer for San Francisco Ballet and editor in chief of Dance Studio Life magazine.