Good inventory control must be at the core of any successful store’s operations

To demonstrate the difference modern inventory tools make, Robbie Edgar reaches back to Billy Graham’s 1977 release, How to Be Born Again. After a first printing of several hundred thousand copies, Word ordered a second run—not realizing many first editions were still sitting on store shelves.

“A year later you could buy the hardback at $1 (a) copy because all those second printings were returned,” said Edgar, senior vice president and chief distribution and logistics officer at STL Distribution North America. “There wasn’t that visibility in the system.”

Now, retailers can track sales of titles and other products daily, see what’s selling nationwide and regularly fine-tune inventory, reducing the need for a time-consuming annual review every January.

Such abilities are critical in dealing with today’s competitive realities: tighter margins, the Internet and everyone from Wal-Mart to Books-A-Million stocking Christian products, said former-retailer-turned-technology provider Randy Voorhees.

“You have to be more on your toes,” said Voorhees, founder of Bookstore Manager, one of the Christian market’s earliest P.O.S. and inventory control systems. “Twenty years ago a bookstore’s margins were large enough that you could make inventory mistakes.”

Various bookstores have made good use of these ongoing advancements.

At Parables in Omaha, Neb., the store uses its IBID P.O.S. system, inventory reports from The Parable Group, current cycle counts and various core lists to monitor stock monthly. If they haven’t sold at least two copies of a book in the last year, they return or discount it.

The previous owners did not do regular returns, said Bill Alford, business consultant for the store that he and wife, Dorothy, purchased in 1983.

“They kept titles on the shelf until they sold out,” he said. “Now we pull returns monthly if the titles don’t sell in a stated time. We discount any of those titles that may not be returnable.”

Parables believes in acquiring most of its stock from distributors, going back to a mid-80s CBA talk by distributor Spring Arbor’s founder, Jim Carlson. He advised retailers to purchase small quantities of books from distributors for faster turnarounds, even though publishers offered better discounts.

Despite the discounts, bulk buys from publishers meant carrying a 6-to-8-month supply of books and tying up considerable sums. Alford said ever since “buying in” to Carlson’s idea, they order daily ones and twos of items as needed.

“The Parable Group gives us reports of the best-sellers,” Alford said. “We try to keep those in stock. We also have several publishers who let us know about their core inventory so we can order the core titles. Gift merchandise is a little different. It all depends on the skill of your buyer, to pick items customers will want, both ‘never-outs’ and unique new items.”

At Trinity Gifts & Books in Richmond, Ind., owner Marcie Chamness started using Above the Treeline (ATT) in the fall of 2007 to help her get a handle on stock at her 35-year-old store.

“I’ve got 1,000 books in here, and I’d like to reduce that number,” said Chamness, who purchased the 2,200-square-foot store in 2006. “ATT has helped me tremendously. It helps tell me what’s selling in the industry. It’s taking inventory of everything and telling me what is selling on the Christian bookstore side and what I’m out of stock on.”

That helps the Munce affiliate do reviews once or twice a year, after seeing what books ranked in the top third of sales and what volumes need to be re-ordered. This system has filtered to the bottom line: after averaging 1.5 inventory turns in 2006, that number climbed close to 2 last October.

In addition, a $4,000 loss in 2007 had turned into a similar gain eight months into 2008. June was the only month of the first eight last year that didn’t register improvement over the previous year.

‘Better discounts’

When it comes to core lists, Chamness labels Tyndale House Publishers’ the best, saying it offers the best discounts and free freight with a certain minimum order.

“I am all about better discounts and free freight,” she said. “Every vendor has their list, but the Tyndale rep sees what I have in and sends me suggestions as to what I need to get in. I use (core lists) to help me sell in my gaps when I need it.”

Technology also helps Anita Eversole at On a Wing and a Prayer in Plano, Ill., about an hour southwest of Chicago. Her two major challenges are cash flow and the balancing act required at her store, which stocks 50% Catholic material and 50% evangelical.

In back is Daniel’s Den, a Christian coffeehouse and concert center that opened in 2001. The 4,000-square-foot, warehouse-type building hosts concerts on Fridays and Saturdays, with her daughter and son-in-law overseeing that venture.

Though she bought the 2,700-square-foot store in 1999, the last two years have proved the toughest. First Eversole got a near-fatal staph infection and was off work for three months in the summer of 2007. Then her husband died of heart failure early last year.

The loss of his income forced Eversole to take another job in the nursing industry, leaving her scrambling when she visits the store.

This makes the help she has received from ATT and CBA’s Cross:Scan that much more valuable. Without assistance from CBA Training Manager Mike Hockett in interpreting electronic feedback, Eversole said she likely couldn’t have summoned the courage to continue.

“When he first talked about (ATT), I said, ‘Mike, you’d be crazy not to do this, wouldn’t you?’ ” she recalled of their initial conversation a few years ago. “He said, ‘That’s what I’m trying to tell people.’

“When CBA came up with Cross:Scan (in October of 2006), it was invaluable. There was nothing like it available before. I know what’s selling in my store, but this gives me a look at a wider area. We go there if we need to re-stock or if it looks like we need to refresh an area. We go there and pinpoint what’s happening in the industry.”

Eversole especially likes the way she can filter out various data to look at particular Bibles’ sales or certain best-selling books. Since Cross:Scan primarily measures Christian stores, she likes it for an industry snapshot, while relying on ATT to examine regional trends.

These systems help her determine what Bibles to stock, such as how well a single version has performed. Still, the merchant’s awareness of local trends is important. For example, although the King James Version sells poorly in Plano, Eversole recognizes the need to stock some for customers wanting to give that Bible as a gift.

“Before we had this, you had to look at information in your P.O.S. and then guess,” she said. “The first month we used Cross:Scan to do Bible sales, we increased 38%. And this wasn’t in a key month, so we knew Cross:Scan had done that. We also did it in books.”

‘More understandable’

Bob Steele of ATT’s Nashville office said it has contracts with 300 Christian stores and 225 in the general market. The sales and business development officer said retailers’ success with the system varies, according to how each one uses it.

“Some still use their P.O.S. to manage inventory and some use it to ring up sales,” Steele said. “Some use (ATT) actively and with others, when I go to conferences I hear them say, ‘I don’t use that enough.’ ”

The former store owner wished a system like this had existed when he was in retailing, though acknowledging he has always been an advocate of employing technology to simplify our lives. While it can at times complicate situations, used correctly technology can improve business performance, Steele insisted.

“(ATT) takes information they are used to looking at in one form and puts it in another,” Steele said. “It makes it more understandable and actionable.”

A cooperative venture with CBA, Above the Treeline is one example of how the industry has reached out to retailers. Another goes back to 1997, when former Spring Arbor President Larry Carpenter and Parable CEO Steve Potratz hit the speaking circuit to promote “Just in Time” delivery.

Now president and publisher of Standard Publishing, Carpenter said the two spoke at numerous industry events and visited as many stores as possible, creating slide shows and handouts.

Back then the concept was relatively unknown, but Carpenter said they ultimately showed store owners a new way to think about business and helped them lower operating costs.

“Where there is no question that the chains, general bookstores and mass merchants have negatively impacted independent Christian bookstores, compared to other retail segments ‘mom and pops’ have fared well,” Carpenter said. “They are still a strong segment of the marketplace.”

Meanwhile, Potratz’s company has developed a system for its 180 stores—including 60-plus franchises—known as Essential Inventory. Generating weekly reports based on sales throughout the Parable system, just over a third of its stores take advantage of it.

Data Manager Erik Ernstrom said there is a monthly fee to use Essential Inventory, with some stores choosing not to participate because they are too small physically, don’t carry enough stock to justify the cost, or think it will be too time-consuming.

However, he thinks it simplifies life for those who use it: “You can try to keep track of eight or ten vendors, or you can do one (core list) and get back on the floor. Why aren’t stores doing a promotion every month? They should be, but they’re not.”

Most industry surveys have shown that the average store is in the 40s or low 50s when it comes to the percentage of best-moving merchandise they stock. Ernstrom said Parable has been able to move participants in its inventory program into the 80s, helping them achieve three to three-and-a-half inventory turns annually, depending on the product list.

After seeing a 2% increase in profits and more products moving through her store, one participant told Ernstrom that she wished she hadn’t waited so long.

“Those are bottom lines that have proven themselves,” Ernstrom said. “Our stores sell 16,000 books a quarter. How do you decide what to sell? A new store doesn’t have a clue. I know a lot of stores who started the program and realized they had a lot of stock sitting on the shelves.”

‘Sales problems’

CBA has also played a role with initiatives that have helped retailers focus on key inventory as well as disciplines, customers and staff, according to President and CEO Bill Anderson. It recently launched a model inventory test program that takes the most recent 52 weeks of retail sales trends and matches it with a store’s to create a model inventory for each department.

“Invariably, when retailers call CBA with cash or sales problems, they can be traced to inventory management,” Anderson said. “Inventory makes up about 65% of any retailer’s store investment. Getting a return on that inventory investment is essential to remain in business (and) ministry and be able to serve customers.”

The challenge of what to stock is changing too, amid round-the-clock competition from the Internet. With customers able to buy any product at any time, price and place, and specialty stores delving into deeper niches, Christian stores must become a special place reflecting their customers, Anderson noted.

Not only is what happens inside the store important, so is maintaining that relationship afterward through Web and mobile technologies, Anderson said. He said communication gives customers reasons to return instead of losing them to competitors who “cherry pick” products.

“In the end, it is the inventory and customer experiences that contribute to success,” he said. “This is why exclusive products, backlist, special packaging, special services and special outreach and connection are important in retailing today.”

Despite multiple data collection services, publishers continue to offer core programs. A spot check by the Evangelical Christian Publishers Association (ECPA) showed that nine of 10 respondents maintain core lists, ranging from 25 to 600 titles.

CBA also maintains a core inventory report listing the top 1,000 titles sold in Christian stores, based on suggested retail price. Titles are ranked by dollar sales, alphabetically and Christian Product Codes (CPC).

Many of these efforts have only stirred a lukewarm response. A Christian Retailing “Vital Signs” industry survey last fall found that only 46% of retailers said they achieved better selection under the plans. Just 38% said they had seen sales increase as a result.

‘More vision’

Wayne Hastings, senior vice president and group publisher in Thomas Nelson Publishers’ Bible division, said his company’s core list gives retailers a target when deciding which of its products to stock.

“I think it gives them a way to look at what we do and let them know from national statistics what our best-selling titles are so they can make sure they are in stock,” said Hastings, formerly an executive with Parable.

“That’s always been the benefit of core—aggregating data at a national level instead of local, so it gives you a little more vision to how well products are doing,” he added. “Then, it gives you back reports that say, ‘OK, these are the holes in my inventory.’ ”

Although acknowledging that some retailers probably get frustrated with the number of core programs, Hastings said that at Parable a small number of vendors did the majority of volume. So, by managing six or seven vendors retailers can usually cover 80% of their business, he added.

The best thing retailers can do is rely on these reports’ tracking and re-order products when they perceive holes in their stock, Hastings said, since any core program will show stores what is selling. If in doubt, he suggests retailers trying one out for 90 to 120 days and seeing whether they achieve success.

However, he also advised paying more attention to inventory turns than vendor discounts, calling the latter the wrong reason to get into a core program.

“You can’t bank discounts,” Hastings said. “Between 40% and 48% discount does not matter to an independent retailer. They would be better off buying in shorter discounts and turning their inventory more frequently.”

The initial concept of core inventory was popular because everyone understands the importance of carrying a certain group of titles, said Michael Covington, director of information and education for the ECPA.

Most publishers understand the shared responsibility of reporting between their sector and retailing, which led to core lists becoming part of a collective inventory management, said Covington, also a former retailer.

Covington liked core lists when he made buying decisions, saying he would look at sales over the previous eight weeks and aim to keep 50% of the copies sold on his shelves. So, if a book sold eight copies in two months he kept four in stock.

No matter what technological resources used, though, retailers have to know their inventory like the back of their hand, he said.

“Not just in an academic sense,” Covington said. “I mean getting out on the floor. Know what you have. That’s what customers are looking for. They have questions, and they want someone to answer them. You’ve got to do better than an Amazon review. Inventory is the tool to do that.”