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We all get distracted sometimes. It’s natural, especially in the hustle and bustle of retail. Letting the occasional distraction turn into a pattern is where problems start to arise. Fortunately, you can use your inventory as a barometer for your business and take concrete steps to make sure the occasional distraction doesn’t end up sinking the ship.
The first test is the eyeball test. Take a physical look at your inventory. Does it look like you have too much? If so, you probably do. Inventory represents real money and having too much capital tied up in inventory means other areas of the business suffer.
Make sure your inventory is moving, and if it’s not, ask why. Are you selling sandals in September? Is there a competing store running a major sale? Is your curbside a mess? Do your window displays still include a deflating beach ball and a plastic iguana wearing sunglasses? All of these are factors and should be addressed, but let’s focus on how to move excess inventory… we’ll come back to the plastic iguana.
- First off, check your displays. Merchandising matters. If an item is buried in a messy shelf with haphazard labeling, there is no better way to make a customer think twice about buying anything at all.
- Bundles can be lifesavers. Slow-moving inventory is often better off being sold at a loss than continuing to tie up capital and take up valuable shelf space. A proven strategy for getting them out the door is to offer them as freebies in combination with your top sellers.
- Call your vendors. Returns or exchanges may still be an option. If all else fails, make sure you have a relationship with liquidation companies in your area. Try to start a bidding war if there is more than one.
2: Foot Traffic
Don’t forget to count how many people actually come into the store. That’s a key metric many small merchants just don’t track. There are plenty of cheap people counters you can buy to keep an eye on how many people walk into your space. If you notice a drop of 5% or more, it’s time to take action.
Evaluate the inventory that’s on offer. Is it the right inventory for this location and time of year? What specials can you advertise to entice people inside? Your inventory is (or at least should be) the first thing customers see when walking by. Is it making a good first impression? A few other things to review:
- Aesthetics (i.e. the plastic iguana) should be your first area of concern. Are the window displays current and well put-together? How are your displays? Does the curbside need a potted plant? Maybe a simple welcome mat? How about a sandwich board with a clever quote and your best weekly special? Get creative.
- Staff can go a long way here. Idle employees who look more bored than helpful are a quick turn-off. Make sure there’s always something to do and that it’s getting done. Recruit friends as mystery shoppers (or some actual mystery shoppers) and try to get a sense of how consistently your staff performs. Cameras can help, but employees are better than jewel thieves at figuring out the blind spots and too much surveillance equipment can make customers feel uneasy.
- Go online. Look at your business reviews on the web. You are being reviewed constantly, and you’re the only one who will stick up for you. It may also be time to embrace e-commerce or at least offer in-store pickup.
3: Average Order Volume
Satellite TV companies will give their longtime customers just about anything to keep their business. Free premium channels, an introductory rate for 6 months, even just a simple credit to their bill. This is because they know it costs more to get a new customer than to keep the ones they have. They’ve invested the marketing, the installation, the dish equipment, the receiver, the content rights, thousands of dollars for every new signup. They know the value of a customer who’s already “in the bag” and is now almost pure profit. Let’s apply this thinking to retail.
So many retailers agonize over the customers who come in and don’t buy. It’s right to think about that, but far more attention should go to the customers who came in and bought something. Why didn’t they buy more? How can you get them back in to buy again?
Your average order volume is going to be a key insight here, and the formula is simple: dollar value/number of transactions. The higher that quotient, the better. You want as many dollars per transaction as you can squeeze out. Here are some tips for getting the customers who are buying to buy more:
- Suggestive selling. This is where you recommend upgrades or related products to what’s being bought. Take no for an answer, but always present some kind of helpful upgrade or add-on to what’s in the basket. There’s a fine line between helpful and sleazy when doing this, so make sure you are really trying to be helpful and not just trying to sell.
- Volume discounts. “Buy 3, Get 1 Free”, that sort of thing. The larger their total order, the better.
If the Information Age has taught us anything, it’s that information is valuable. In other words, there’s not just value in your inventory, there’s value in the numbers that surround your inventory. This is why it’s important to not just manage, but really optimize your inventory as much as possible.
Software tools like Shopventory provide the data you need to turn your inventory into a source of insight, rather than just a pile of stuff. Shopventory’s inventory management tools help thousands of merchants worldwide optimize billions of dollars worth of inventory every day.
Real-time stock Alerts, detailed Sales Reports, and up-to-the-minute Inventory Reports all come included for 79¢ per day, with advanced features like Ingredient Tracking, Vendor Management, and Purchase Ordering available for less than $1.69 per day.
Right now, you can start a full-feature 30-day free trial with no credit card required, backed by live Customer Care and a 30-day money back guarantee. That’s 60 days risk free!
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