Aging inventories can burden even the most prosperous store. Merchandise that doesn’t sell must be insured. There are also storage costs, taxes and the fact that you have your working capital tied up in a resource that isn’t making money for you. Since these costs continue to rise, tight inventory control is still one of the best investments you can make.
But there’s another detriment and cost to carrying old inventory - you run the risk of being perceived as the store “with the same old stuff” in the eyes of the consumer. Depending upon the percentage of merchandise that hasn’t sold over the last year, aging inventory can have an even more profound impact on your store from a marketing perspective. It can be a turn-off to customers, especially those repeat customers who like to drop by and see what’s new.
Having inventory that is new and distinctive, on a consistent basis, will set your business and brand apart. Stores which offer custom designs have even more of an advantage as customers love finding that unique item. Cultivate and establish yourself as a store full of surprises.
Maintaining a store full of “surprises” and new inventory can be an expensive proposition. Aside from the fact that it is bad business practice, few store owners have the luxury of buying unlimited merchandise. Inventory control and smart buying habits take discipline and planning.
The first step in inventory control is to take a close look at your current merchandise, item-by-item, to see when you bought it. If you don’t have a computerized inventory system, now might be the time to consider installing one. An inventory control system will give you a much better understanding of what your customers are buying. Code your inventory with a purchase date so you can create an accurate aging report and take action on your slow moving goods. Review the reports to identify your fastest sellers, and make sure you keep those in stock.
Look specifically at your older gold merchandise. Chances are you have several older gold pieces that you bought before the spike in gold prices. Even though the price of gold has dropped, these items might still be worth more to you by melting. Take that money and invest in new inventory (especially alternative metals) that is less expensive. Finally, when reviewing your older inventory, consider markdowns. Depending upon the quantity of older goods you have in stock, you might even consider a clearance sale with significant discounts up to 50% or more. Think of it this way - better a dollar in your pocket than gathering dust as unsold merchandise.
So you’ve cleaned house. Now what about buying new merchandise? Armed with new knowledge about what you’re selling, review your open orders; cancel any open product orders for which you don’t have a great demand. Spend some time researching and reading about jewelry trends. Attending national and regional jewelry trade shows is a great way to see what’s selling in other markets. It’s also a great way to meet new vendors with different merchandise than what you’ve been carrying. Many vendors will work with you to test the sale of their merchandise on a memo basis. Profit margins may not be as high as if you bought the items outright, but buying a certain portion of your inventory on memo will free up cash and allow you to carry these new items to see if they fit with the interest and demand of your own customer base.
Another way to keep your inventory fresh is through the look and feel of the store and merchandise displays. You’ve just completed an inventory analysis - now take time to evaluate the setting and showcase for your merchandise. Start with your store front which should be well-lit during the evening, and should be clean and simple, but modern. All exterior signage should be easy to read to a passerby. Avoid elaborate displays. Windows should be kept clean at all times, and burned-out light bulbs should be changed immediately. Sometimes all that is needed to boost sales is a store front makeover - especially for the holidays.
Inside, a store must provide a warm and friendly atmosphere. This can be achieved through the use of color and lighting. At one time or another we have all walked into a business that looked sterile and inhospitable. Plain white walls and fluorescent lighting do not encourage customers to spend money. At the same time, it’s important not to go overboard with interior design. You want your products to attract the most attention, not the decor. Little things can have a big impact. Have an over-stuffed chair for the husband who is tagging along or the child who is tired. Offer free hot chocolate, coffee or tea and cookies for weary shoppers.
Maybe it’s time to do a partial store remodel. Aging inventory is not the only signal to a consumer that you have a “tired” store. A fresh coat of paint, new carpet, rearranging the configurations of showcases are simple things that communicate new. The chain stores have almost the same store layout, store branding and signage. As an independent store owner you have the opportunity to be different, to be a bit quirky. Strive to have some personality in the merchandise you carry and the store you run. People love that, especially when they are out doing some holiday shopping.
By becoming that cool little shop around the corner, you set yourself apart as different with something new. A store full of surprises, not the “same old stuff.”
Bob Epstein is CEO of Silverman Consultants. Offering a legacy in sales strategies for jewelers since 1945, Silverman provides guidance to store owners seeking to turn around a business, sell off unwanted inventory, or liquidate an entire store. With offices located in Charleston, SC; New York City; and Saskatoon, Canada; the company helps jewelry store owners and chains formulate strategies designed to maximize revenue in times of transition, whether due to retirement, store closing, or simply when needing a boost in sales. For more information, visit www.silvermanconsultants.com or call Bob direct at 800-347-1500.