PERSPECTIVES

From The Co-Founders

rss

Tips, Tactics & Strategic Insights and Commentary
from The ROI Co-Founders, Pat Johnson and Dick Outcalt
Outcalt & Johnson: Retail Strategists LLC; Retail Turnaround Experts

COVID-19 thumbs/InvTurns.001.png
Getting in Shape for Musical Chairs?

The playing field has shifted dramatically under the feet of retailers. 

Merchandise orders placed months ago are now proving to be "too much stuff that consumers no longer want so much of,"  as was reported rather colloquially just 3 days ago.  All this was summed up this way: "Retailers with slower inventory turns might find current conditions especially difficult to navigate." *

Now, look at the chart at the top of the page. Without being dramatic, it may be a lifesaver for your business this year. 

Let's explain. It's an incredible quick reference guide to your sales @retail compared to your inventory @retail.

  • For instance, for a category that should be operating at, say, 3 turns, you compare the expected sales for the next 4 months (or 17 weeks or 120 days) to the inventory @retail on hand for that category. 
  • Quickly you will be able to see whether that category is over-inventoried.
  • Sure, it's a rule of thumb. But it can be taught and built into your entire management team, helping you avoid having excess inventory, whether or not we have a recession.

So, what to do right now? Focus everything on this retail-stock-to-sales ratio comparison pointed out above. If you have more than enough inventory on hand in one or more categories, here are some ideas of what you might do. 

Seize the "Special Sales" opportunities

  • Take advantage of the upcoming Memorial Day weekend, plus the "Dads and grads" themes of June to have promotional events.
  • Take sharper markdowns, sooner. 

Buy less, more frequently

  • Resist the lure of "special prices" for buying more (your suppliers are trying to raise their turns too, you know.)

Buy more of your "basic merchandise" and less of the discretionary items. 

  • Consider using some of the online wholesale marketplaces to find more specialty items, many of which offer lower minimums and shorter delivery times.
  • But, again, be ready to resist the offers of "special deals" from those marketplaces. 

Managing and controlling the inventory is the #1 responsibility of the owners of retail businesses. It is both an art and a science, and distinguishes retailing from all other kinds of businesses. 

But, it also is what can soak up all your cash. And in these uncertain economic times, when the drumbeat of warnings of a recession could become a self-fulfilling prophecy, your operation needs to be as lean and nimble as possible. 

Like a game of musical chairs, when the music stops, you need to be able to move quickly to find a chair. 

----
* "Stores Have an Inventory Problem", Jinjoo Lee, The Wall Street Journal, May 20, 2022.

Related Articles

  • grfx-Lib4Owners/customers2.png

    Is 2020 Getting You Down?

    Is 2020 continuing to wear you down? No surprise. And no shame in that!

    Retailers are among the most optimistic folks we know. But the relentlessness of the disruptions and in some cases tragedies of the three pandemics – the virus, the economic meltdown, and the civil unrest – followed by the wildfires in the West and the hurricanes in the Southeast, now compounded by the uncertainties of national election. Oh, and then there's the impending flu season. And... And...

    It IS a lot. And it feels as if there is no relief in sight. But maybe there is. 
     

  • COVID-19 thumbs/CouldShouldWill2.001.png

    Is Being First Smart?

    A few years ago, during a planning session in our office, we drew a quick diagram on a whiteboard. It showed three shapes. 

    • The large rectangle at the top was labeled "What we COULD do" Lots of good ideas deserved a place in this box!
    • The much smaller rectangle below it was labeled "What  we SHOULD do" Ahh yes, those pesky obligations. 
    • And finally, at the bottom, was a tiny little square: "What we WILL do!" 

    Out of all of the potential things we could do, which ones truly warrant our time, energy, and resources?

    That picture keeps coming to mind as the COVID-19 shutdown orders on retailers of "non-essential" goods are starting to be lifted. 

  • Nested$ copy.jpg

    Calling All Merchants: Are Higher Margins Available?

    Here's a post-pandemic strategy that should not be missed: higher margins! 

    Not the entire store, of course; you must be a merchant here. 

    But think about it: many shoppers have increased savings, reduced debt, or gotten their job back. Maybe all three.

    And after months of being at home, and spending on home improvement and groceries, many shoppers have pent-up demand to spend on items they have had to postpone, like for themselves. Whether that would be in a restaurant or in a specialty store, shoppers are more willing and able to spend. (And some even feel entitled to spend.)

  • COVID-19 thumbs/Tap2Pay.png

    Silent - yet engaging - addition to your sales team?

    Ready to add a bit more fun to your store, AND generate incremental sales? Consider this friendly Tortoise, a "tap to pay mobile smart store."

    Here's how it works. You choose items to sell that can be boxed, and held at room temperature. Maybe it's a dozen cookies. Or a book. Coffee mugs? Mobile phone rechargers. Whatever makes sense for your store. (And apparently, higher priced goods do especially well.)

    Place the boxes into a Tortoise container that has colorful graphics of what's inside and the price per box, and send the Tortoise on its way.

  • “Why Is Inflation So Stubborn? Ask Your Local Small Business”

    Perhaps you saw that recent article* in The Wall Street Journal. As Ruth Simon reported, "The cost pressures squeezing small businesses – and their need to pass along those higher charges – help explain why inflation has been so stubborn."

    • Over 80% of small business owners cited rising labor costs as the greatest impact on their cost of doing business.
       
    • Two-thirds of owners identified the rising costs of Commercial Insurance, Goods/Inputs, and Employee Benefits (including health insurance) as most significant. (see chart**)

  • Too Many Choices: The Curse of the Modern Age

    “There are a bazillion possible Starbucks orders – and it’s killing the company!”

    That is the provocative title of an interesting New York Times Guest Essay* by Bill Saporito, editor-at-large at Inc.

    • "Starbucks says there are more than 170,000 possible drink combinations available, but outside estimates have put the number at more than 300 billion. And,” he laments, “the person in front of you always seems to be ordering 100 million of them.”
    • "Companies have always had to deal with choice and customization versus the complexity that comes with it. But we know that too much choice can be paralyzing," Saporito writes.

    Saporito’s message is very relevant as the Holiday Season approach. To reduce the paralyzing effects of too much choice, now is the time to finalize your merchandising strategies.



Comments are closed.
To get your own MEMBER ACCESS,  just go to the SUBSCRIBE page and make your choice.

Incredible value! 👀