When it comes to retail knowledge, I’ve heard many dealers state, “I’ve been in retail all my life and there is very little I don’t know or haven’t experienced.” But I would point out, there is a large difference between what that dealer knows versus what they should know.
If you are a store owner or manager, ask yourself these simple questions:
- Can you list the top 5% of your items in terms of dollar sales verses unit sales?
- What percent of your inventory turns less than two times a year?
- How much of your inventory turns less than once a year?
- How many inventory turns do you get by inventory class in a year?
- Of your total inventory, how much in dollars is considered surplus, obsolete or slow moving?
- How much of your inventory turns less than once a year and what is the carry cost for same?
- How many SKU’s do you stock in the store?
- Can you name the top 100 items expressed in dollar sales (not unit sales)?
- What is your gross margin return on inventory for each of your merchandise classes?
- What is your return on sales, equity and inventory investment?
Retail knowledge consists of information about what sells or doesn’t sell versus the concomitant inventory of each item or class. Additionally, one needs to know about display, merchandising, signage, adjacent placement, markdown strategies and etc. etc. Retail knowledge goes well beyond just product knowledge and recollection of how things have been done in the past.
Most retailers can spot a slow sales period, but they are less prepared to address the issue of how to solve or react to the situation. If business is slow, is the problem weather related, competitive posture, merchandise mix, presentation or selling skills or lack thereof?
Retailing, particularly in today’s digital world, is challenging and highly competitive. The prime challenges are how to attract consumers in the internet age, how to compete with the heavy hitters and how to effectively manage the breath and depth of inventory needed to attract and sustain sales.
The independent tackle store must strive to achieve five very important growth objectives:
- In light of today’s consumer habits, make online selling a priority endeavor, from selection, to pricing, to special offerings with short windows of opportunity. This includes a lot of participation in social media avenues.
- Take the position that you will match all online pricing even if you incur a loss to do so. It is better to lose a few margin dollars than lose the consumer and all their future business. Work with your vendors to help out on the margin issue vis-à-vis meeting competitors’ prices.
- When It comes to your inventory, think in terms of much higher turn rates such as four or six turns, not two turns. Think “Costco” i.e. bring it in, feature it at a great perceived bargain and blow it out. Don’t let inventory put down roots; keep it moving.
- Alter your product mix to include the basics, higher margin categories, experimental products, and seasonal items with quick turns. Move quickly to reorder as needed or to markdown and blow out that which is not selling well.
- Make your store and website unique and measurably better than your peers. If you are “just in the pack” make changes . . . make your operations notable and consumer attractive.
Next step, determine what you should know about retailing versus what you actually know.
Do your homework and execute well. You will be richly rewarded for doing so. Good luck!