The buying bug

This ”Buying Bug” is easy to catch and has bitten more retailers than you can imagine.

The “Bug” I am speaking about is the habit of simply purchasing far too much inventory than is required for a particular retail store or department within a store.

This common practice has crippled many retailers from having “open to buy credit” or dollars on hand to purchase inventory that is necessary to the successful operation of day to day business. Fact be known, I have personally seen over-buying of inventory sink long term businesses.

When doing strategic planning for brick and mortar retailers, I see this trend of over-buying inventory largely evident in two particular markets.

First, the family owned business, where family dynamics and personal preferences in direction and opinion, mixed with the history of how things used to be done, take a toll on the check book and floor space.

The other dramatically affected market segment is the franchised “popular brands” type of store. The franchisee unfortunately in many cases has little personal say about what may or may not be inventoried on their own sales floors or quantities thereof.

The franchisee is then put in a position of stocking inventory that may not be what the local market is asking for in abundance. This practice takes up valuable showroom real-estate and inventory dollars. My advice to individuals in this position is simple – use your voice. If you have done any travelling whatsoever, you can get a fairly quick indication that trends in Saskatoon, are far different than what’s trending in Toronto or Victoria, Los Angeles or Chicago; all markets are unique. Serve your unique market.

So what can you do if you have the “Bug” and or an excess of inventory? I’ll share with you some tips from my popular “Retailers Cutting Edge Checklist” – these tips are from the Inventory list section. Read them and reap!

First off, this is not the time to reminisce about how things used to be done, or how your father would have priced product to make maximum profit. Consumer trends and buying habits are changing faster than ever. You must live and retail in the present moment, if you want to be a successful business owner.

  • Do you capitalize on current trends and buy your product using “Just In Time” ordering processes? Don’t over-inventory goods; focus on growing the special order niche of consumer demand. Custom is where it’s at for many markets.
  • Have you started reviewing your inventory levels more frequently? Do you drop lines that no longer serve you? Are you listening to what customers are looking for? Don’t just buy from your favorite suppliers because that’s the way you’ve always done it.
  • When filling your sales floor, do you focus on faster selling and higher profit items to show and go?
  • Are you continually liquidating everything over 90 days? This inventory represents cash. Get over the bad decision you may have made in purchasing some lines that didn’t perform well. Clear out the stock and move on. Stop living in personal judgement and stop asking permission – just do it.
  • Clear out your outdated items at cost. Seriously, just get over it. Fresh is best, clear that inventory out. I don’t care how your father retailed or how the franchisee may feel about it. Do you want to be in business or in the unemployment line? Besides, customers will remember the deal they got and always wonder what’s new in your store.

There you have it. Just a quick prescription on how to cure the bug. I travel the world helping cure this virus. Need me to make a house call? Start with your FREE 25 Point Cutting Edge Checklist at http://www.retail-evolution.com/

Questions, comments, house call? Come over to my Retail Evolution Facebook page and start a discussion. https://www.facebook.com/RetailEvolution