Author: Cassie Scott
Managing inventory doesn’t have to be a never-ending pain for archery retailers. Use these four tips to help identify your store’s ideal inventory levels, improve your cash flow, and increase your flexibility when ordering products.
Reliable, automated inventory-tracking systems like ATA ePRO instantly track and update your service work, range reservations, and point-of-sales purchases and inventory levels. Photo Credit: Shannon Rikard.
1. Follow a Formula for Turning Inventory
Kurt Smith, the ATA’s senior manager of retail programs, suggests retailers study their inventory and calculate how many times they turned it the past year. That review can reveal whether the retailer has too much, too little or just the right amount of inventory.
Let’s do the math: Take the cost of goods sold the previous year and divide it by your average inventory cost. In other words, subtract your ending inventory from the beginning inventory and divide by 2. Here’s an example of an inventory-turn calculation:
Although there’s no single correct number of inventory turns, Smith said most retailers want to turn their inventory three or four times annually. Lower turn numbers mean you likely have too much inventory, which means money tied up in stock and difficulty adding new products. Having too much of one product can be troublesome if a manufacturer discontinues it or demand declines. Customers also notice when products aren’t moving, which could hinder their buying decisions.
High turn numbers can mean sales are strong. However, it might also mean you’re constantly reordering to fill empty shelves, which means lost sales when products aren’t always available. By using this formula and identifying your inventory turn, you can adapt to meet your customers’ needs.
2. Obtain a Quality Management System
To efficiently manage inventory, retailers need an automated inventory-management system. “Retailers should acquire a quality management system that runs in the background and tracks what they buy and sell,” Smith said.
In today’s retail environment, retailers can hurt their business by relying on unsustainable inventory tracking systems like Excel spreadsheets or pen and paper. Yes, manual systems can work, but data entry is time-consuming and prone to human errors. Smith poses this question: “What good is having numbers you can’t trust?”
According to Entrepreneur.com, good inventory tracking systems reduce theft, improve customer service, effortlessly track products, and help manage your money. Reliable, automated inventory-tracking systems like ATA ePRO instantly track and update your service work, range reservations, and point-of-sales purchases and inventory levels.
Most such systems let you order and track all shipments. They also stockpile SKU numbers from manufacturers and regularly update their records so you can quickly and easily add products to the system. A good program also lets you set minimums and maximums on inventory levels to help avoid empty shelves or excessive products.
Those features help you buy smarter because you’ll know what you sold, when you sold it, and how much you profited. When planning the next year, you’ll know what to buy and when to stock it. That knowledge also helps you program better orders. For instance, you’ll be able to buy what’s needed at discounted prices at the ATA Trade Show, which can reduce freight costs through fewer shipments.
To spark more purchases and move inventory, post clever signage, keep your store clean, create visually appealing displays, and organize your products, shelves and store layout. Photo Credit: Shane Indrebo.
3. Analyze Your Sales Data
Once your inventory-management system is in place and you’re amassing good records, you’ll have up-to-date information on your products. Analyze your sales data to improve your decisions when buying inventory.
Sales data from the previous year verify your best-selling products. “It’s helpful to know what you sold, but also how much money you’re making on it [aka, profit margin],” Smith said. Are you selling a lot of one product but not making money on it? If so, the product is underpriced or you’re paying too much for it. When profit margins are inadequate, it might be time to reconsider what you’re selling.
4. Improve Your Merchandising Game
Merchandising is everything you do to promote your products to potential customers, and then sell your products once they enter your store. In-store merchandising can include display techniques, free samples, on-the-spot demonstrations, special offers or pricing, and other point-of-sales methods.
To spark more purchases and move inventory, post clever signage, keep your store clean, create visually appealing displays, and organize your products, shelves and store layout.
Customers don’t want to see the same dusty products they’ve seen on the same peg for three years. “If anything in your store has had a birthday, it’s probably time to reduce the price and get it out the door,” Smith said.
Several factors affect how well you manage your inventory. Whether you think you’ve stocked too much product, or you fear you’ll run out your best-selling items, review the tips in this article to help hit your sales marks with confidence.