Question: "We must keep bringing in new items. But, how do we keep from being over-bought?"
Answer: "Very carefully!"Ahh, the appeal of new items. Or, your customer's ever-growing "wish list" items. But, when you are also trying to control inventory, and keep turns up, the challenge is, "Really, which should you buy?"
- As many retailers are only too aware, if you are not vigilant, you may experience bloated inventories, which can cascade very quickly into cash flow problems.
Here are 6 key questions for you and your buyers to ask yourselves as you consider new items. We think of it as an "entry exam" for merchandise. It's a very quick way to identify which items actually deserve to be in your store.
#1. Can my customers get this item at other stores in my market area?
If yes, it probably has no pulling power.
#2. Is this a good margin item, or is it subject to a lot of price competition?
Slow turners with weak margins are double trouble.
#3. Does having this item in stock help me sell other higher-margin merchandise?
If not, you may not need it.
#4. Can I get faster delivery on this item than I am now getting?
If yes, you may be able to cut back on your stock.
#5. Do I order larger quantities of this item than I actually need in order to take advantage of price breaks?
If yes, you may be coming out on the short end when you figure in all your carrying costs.
#6 Do I have an emotional attachment to this item that reflects my personal taste rather than a business-like response to my customer’s desires?
If yes, get rid of it!
Go here in the Library for Owners at The Retail Owners Institute(R) for more useful and practical insights and tactics about protecting your store from inventory bloat. See how quickly you can achieve greater control of your inventory!
New items? Oh my, yes.
Too much or too many? Not any more!