|Buying just right for the sale|
|Written by Erik Ernstrom|
|Wednesday, 20 May 2015 03:54 PM America/New_York|
Keep these practices in mind when stocking for promotions
A few years ago I attended an inventory workshop facilitated by one of the buyers for Grainger Industrial Supply. In all of the buyer’s years of purchasing inventory for Grainger stores, she could count on one hand the number of times she got promotion-buying exactly right.
Her admission certainly made me feel better about the promotional buying I had done when managing our local store. There were times I ordered far too many or, on the other hand, instances when we’d run out of the sale product before the promotion ended. When we sold out, there was the “thrill of victory” because there wouldn’t be any leftovers. But then the buyer’s next words changed my response to the “agony of defeat.”
“You never want to run out of a promoted product during the promotion,” she said. “You’ve told the customers you’ll have those items in stock at those prices when they finally get around to shopping your store.”
Ouch. That hurt. And no matter how I tried to justify it, my initial response had been wrong. Selling the last of a promoted product isn’t a reason to cheer. Promoted products need to be stocked deep enough to guarantee they never run out during the sale.
We’ve all sold out of something we were featuring in our store. Sometimes it’s completely out of our control, such as when vendors and distributors are out of stock or UPS goes on strike. It happens. But this should force us to reflect on our inventory policies for unpromoted products as well.
If we’re failing to keep promoted products in stock when we can control it, what else might we be missing? And how can we make sure we’ve got the breadth necessary to serve our customers? There are three practices to keep in mind in that regard:
1. Reorder frequently with the goal of keeping a lean inventory on a per-title basis. This will allow you to increase breadth, thus providing a better selection for your customers.
Let’s compare two stores to see how this works. Each of these stores has the same investment in inventory, but with different stocking strategies.
The first owner has three copies of book “A.” This title sells one copy a month so the store has a 90-day supply. This isn’t necessarily bad, but the store’s dollars are tied up in one title.
Compare this to a second owner who only stocks one copy of book “A.” This owner uses the store’s POS data to keep inventory levels lower by placing reorders at least once a week. And by ordering through distributors, the products are back on the shelf in less than a week. This allows the owner to get away with stocking only one unit and, in turn, opens up inventory dollars to bring in one copy each of book “B” and book “C.”
The selection at the second owner’s store has just increased without sacrificing sales or cash and now is able to serve its customers in a greater capacity. Because there was no added investment, sales of these “new” titles also increase the store’s return on investment.
“But what if these new titles don’t sell?” you ask. “I’ve just spent money to put something on my shelf that nobody wants.” Hopefully you aren’t bringing in titles “nobody” wants. This is where having access to national sales data will direct you to titles that are selling, plus you were already going to tie up this money with triple the necessary inventory. Why not give two other titles a chance to sell?
2. Take advantage of tools that will help you plan for the future. There are items that sell OK for most of the year, but spike during specific seasons—devotionals at the end of the year or kids’ Bibles during communion/confirmation, for instance. Hopefully you’re going with more than just your instincts regarding what to stock during these times.
We can only remember so much without relying on the data. If I were to ask you what the best-selling devotional was in your store last Christmas, you could probably tell me. But what about the top 10 nationwide? Or the top 20 Christmas CDs? Again, you might be able to name a bunch of them that sold well for you. But having access to national data that shows what everyone was selling can help you fill out product breadth and offer more selection to your customers. When you’re heading into a season like Christmas, access reports that show the top-selling items from last year, and make sure you can you easily compare them to your current inventory.
3. Remember that your store is all about product discovery, not just best-sellers. Giving your customers the opportunity to find new products, possibly entire series or lines, will help them grow closer to Christ. And that’s what our ministry is all about—having the right product at the right time for the right customer.