WHICH ONE OF these three categories do you fall into? A) Jam-packed store … shelves overflowing, baskets filled on the ground, stockroom shelves stuffed to the ceiling. Maybe your store is the opposite? B) Shelves are sparse, some pegs are missing merchandise; you’re just waiting for your next shipment to arrive … whenever that is. Or perhaps you’re C) A well-stocked store with merchandise that has arrived in the last 30 days, but some goods have been there six months or even years!
I’m not going to lie. I’ve been A, B and C in my career as a pet store retailer. I struggled in every scenario. Why? Because the inventory wasn’t being managed properly.
To be a healthy and profitable retailer, you must understand that turning your inventory is everything. Inventory is your biggest asset and greatest liability. But how do you find that right balance?
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Without monitoring your inventory regularly, you can often be left with too much stuff, eating up all your cash (as in A). You could be missing opportunities to make more money if you don’t have enough goods for sale (as in B). Or you could be losing money because you’re sitting on old inventory that’s depreciating, getting older and making you look more like a museum than an exciting place to shop (as in C).
Consider each of these approaches to be the boss of your inventory:
1
Stock what sells. Keep your best-sellers in stock, always, always, always! Even being one day of out of stock means potentially missing a sale and disappointing customers. Know your 25 best-selling items. Keep them in stock always. Have 1½ months’ worth of inventory in stock to meet the demand and replenish regularly.
2
Get rid of dead stock. Uncover any items older than six months, and put them all on sale. If your customers weren’t interested in buying it within the last six months at full price, they aren’t going to do it anytime soon. What you make by selling it will give you the cash to invest in something new and exciting.
3
Leave impulse shopping for the customer. Before you bring in something new, think about what it’s going to replace. It’s tempting when a manufacturer you love comes out with a new product, but will it be a new solution for your customers, or will it compete with something else on your shelves? Pay attention to your assortment to ensure you don’t have too many similar things.
4
Consider selling by volume. Look for opportunities to sell in bulk, case quantity or even by the dozen. Whether you provide your own packaging or include a case price on your signage, getting the customer to buy more of something increases sales.
5
Invest in a good POS. A modern point-of-sale system will help you track not just your inventory on hand, but sales and customer reports. Tracking and interpreting this data is critical to helping you manage your inventory and make good decisions when it comes to markdowns, restocking and promotions … all of which relate to inventory.
As an independent retailer you have the luxury to curate a selection of unique merchandise and make a beautiful presentation while doing it. Fresh new merchandise on a regular basis excites customers to come in more frequently.