Edge Retail Academy Blog

How to Run a Successful Sales Training Session

By David Brown

Staff sales training has almost become a cliché in business. Everyone knows they should do it but finding the time (50% of sales managers say they can’t put the effort into it that they know it deserves), or knowing how, can cause a problem.

Sadly, sales training does wear off over time, like an exercise class or a good shower. Research shows that 84% of all sales training is lost after 90 days. Given the investment in time and energy this may make it seem pointless, but further analysis has shown that every dollar invested into sales training can yield up to $29 in results, and staff can improve their performance by up to 20% with the benefits of sales training. Few other areas of a business can offer this sort of return. If you’re serious about growing your store you need to be serious about sales training.

So how do you make sure your sales training is effective?

Here are 7 steps that can help you get better results from an effective training program:

1. What is your objective with the training session? (It could be to know the ‘story’ of a new product line, to understand the benefits of 18k, different settings, etc.). Ideally, by the end of your training session all of the staff attending will be able to achieve the objective you have set.

2. Encourage interaction of staff about the topic. Do not let them take the session into another direction. If a staff member interrupts with a topic not relevant to the training, please let them know you will chat to them about this at a later time.

3. Rotate the leader of the sessions, enabling staff to take ownership of researching about product, etc.

4. Role Play at the end of the presentation so staff can show their understanding of your expectation.

5. Add a questionnaire at different times to reward staff that are listening and remembering the content.

6. Go back to your objective to check you achieved your goal.

7. Ask for feedback from your team to ensure you are adding value to their performance and productivity.

So how does sales training make a difference to results?

1. A higher percentage of salesperson budget achievement. A well trained sales force is more likely to achieve their goals than those who aren’t. Research company CSO Insights discovered that goals were 8% more likely to be achieved by salespeople in an organization where effective sales training was in place

2. Better conversion rates. Those companies who employed training programs that were deemed effective were also inclined to increase their sales conversion rate by 30% compared to those companies where staff believed sales training failed to meet expectations.

3. Meeting customers needs and expectations. Salespeople who have been adequately trained are much more likely to meet customers’ expectations and to make suggestions that more suitably meet customers’ needs than those without good sales training. This obviously converts into better sales results

4. Lower staff turnover rates. Research has shown that companies with strong sales training have greater employee retention, in some cases almost double that achieved by companies who do little in the way of training, or whose training is considered inadequate.

Training the staff may seem like the first step in the process, but often having an effective sales training policy can begin with ‘training the trainer’. Companies that also invest in good sales coaching training programs for their trainers will also see a much stronger correlation between their training efforts and goal attainment.

Sales training is an important business investment. Neglecting this area is a false economy that will restrict your business performance now and into the future. In the same way that giving up on the gym will ultimately lead to poor health and other complications, giving up on sales training will lead your business towards illness and a less healthy profitability.

Make a decision that you are willing to commit a portion of your time and expenditure to this important area of your business and enjoy the rewards that it can bring you.

David Brown is president and founder of The Edge Retail Academy, a company offering industry benchmarking and management advice to increase profits. If you would like more information on how The Edge Retail Academy can help you control your inventory and add more dollars to your bottom line contact carol@edgeretailacademy.com, call 877-569-8657 or visit www.edgeretailacademy.com.

This article originally ran in Mid America Jewelry News.

This Might Be the Best Change You Can Make in Your Business … And Too Many Jewelers Fear It

By David Brown

It’s quick, easy and highly effective.

April data across our platform of same-store information shows a slight drop in sales achieved compared to April 2017. This month’s result of $103,546 comes in nearly 3 percent lower than last April’s $106,715. The average sale for April was $380, up from $364, an increase of approximately 4 percent, with a decline in units sold from 263 to 227.

The decline in margin continues to be a cause for concern across many stores, with the data pool indicating a drop from 45 percent to 44 percent in monthly margin in just 12 months. Obviously one month represents a snapshot, but our other data has shown this to be a trend. Any average obviously has extremes, and there will be store owners who are encountering an even bigger decline than this. Every $1,000 of sales will translate into $10 less dollars of profits achieved purely from the lower margin, and thus the drop of 3 percent in sales becomes a decline of almost 4 percent in gross profit.

This is the multiplier effect of margin. Just a 1 percent drop in margin achieved can increase the decline experienced in profit by 33 percent over the decline experienced in sales (3 percent to 4 percent). Let’s make some assumptions about the more extreme figures that might exist for an individual store.

Let’s assume Duncan’s store has seen sales drop from $100,000 to $90,000 for the month, a larger decline of 10 percent. Let’s also assume that Duncan has better-than-average margin but experiences a drop in margin from 50 percent to 48 percent. Last year Duncan’s gross profit would have come in at $50,000 ($100,000 of sales at 50 percent margin). This year they come in at $43,200 ($90,000 @ 48 percent margin).

The 10 percent drop in sales translates into a 13.6 percent drop in profitability – the margin decline has accelerated the sales decline by a further 36 percent (10 percent to 13.6 percent).

The same can be true in reverse. Helen’s store has seen her sales increase 10 percent, from $100,000 to $110,000. She has also managed to improve her markup from 50 percent to 52 percent. What effect does this have on her gross profit?

Last year’s profit of $50,000 has now increased to $57,200. Her 10 percent increase in sales has been accelerated to a 14.4 percent increase in her gross profit. Just two percentage points extra in margin gives her an extra 44 percent profit on those additional dollars.

It’s easy to view small percentage changes in margin as insignificant; a percent here or there would appear to have little effect on the outcome of a businesses profit. However, as the numbers show, the effect on the bottom line can be considerable. In Jane’s example, the extra margin has made a difference of $2,200 over what she would have made without it. Her $10,000 of extra sales has delivered $7,200 in extra profit by the combination of increased turnover and increased margin. She didn’t need the extra sales to get the margin benefit, but the two together create a healthy improvement on the previous year.

Increasing margin costs almost nothing to do, doesn’t require extra staff or product, and doesn’t require additional space. It doesn’t affect rosters or double the time spent having to clean. It offers an infinite return on money and time that virtually no other business improvement can provide. It can be the quickest and easiest strategy to implement, with the only true risk being that the customer may say no.

Unfortunately, many small business owners say no for the customers without giving them the chance to decide for themselves.

Don’t be this type of business owner. At least give your customers the chance to reward you more handsomely for what you already do.


DAVID BROWN is president of the Edge Retail Academy, an organization devoted to the ongoing measurement and growth of jewelry store performance and profitability. For further information about tfinhe Academy’s management mentoring and industry benchmarking reports, contact inquiries@edgeretailacademy.com or phone toll free (877) 569-8657.

This story originally ran as an INSTORE Online extra.

It’s Showtime! Are You Ready to Buy?

By David Brown, Edge Retail Academy

Omaha, NE—Whether dealing with sales representatives in-store or attending jewelry trade shows, the process of buying stock is ongoing.  There are store owners who have a good handle on what they need when purchasing but there are plenty who don’t. In fact, retailers might find they are not well-informed enough to make strategic buying decisions when the time comes. So, are you prepared to buy?

Retailers are always prepared to buy new items – a look at their increasing product levels readily confirms that – but what it really means to be prepared to buy is whether retailers have done enough groundwork before heading to buying group meetings and trade fairs.

As a starting point, look at your stock reports for the last six to 12 months.

Has your product holding increased? Do you have more stock now than at the beginning and if so, was it planned and have sales increased as a result? If not, this is a sign that cash flow could shortly become an issue. If you are holding more product – and you’ve paid for it and not achieved increased sales – then that also means a corresponding reduction in available cash or an increase in debt. This can only be sustained for a short period of time.

If stock levels are higher (than your optimum stock level) then you need to address how you will fund any new purchases. Do you have the money to do it or will you need to reduce your current levels of product to provide the cash for new product? If not, then you probably don’t need to buy. In fact, your cash flow may have already told you that. Unfortunately, when completing this exercise, most storeowners have a higher level of stock than they did six to 12 months earlier. Few have less.

In the majority of cases, this is not natural growth but an oversupply of product that hasn’t moved, which is jamming up the works and preventing a business from growing. If you don’t control the old product, it will soon choke the new like weeds in a garden.

Prepare the right way. 

In preparation for buying group meetings and/or trade shows, retailers need, at the very least, a buying plan and budget that matches their sales plan. By all means, research new product lines and suppliers, but if you buy product that wasn’t included in your original buying plan you will need to increase your sales plan accordingly. For example, if you invest $20,000 in a new entrepreneurial line that isn’t part of your existing sales budget, then you need to increase your sales budget by say $50,000 ($20,000 x 1.2 stock-turn = $24,000 x 110 per cent mark- up = $50,400) to include it. Either way, the buying plan needs to match the sales plan or the sales plan needs to match the buying plan.

Print out a supplier report by gross profit for the last 12 months. Are there any suppliers on the first page that have a closing inventory that is level with or greater than their sales? That’s a problem to address urgently. If they are on the first page of the report then they are amongst the better performers so there is an opportunity to discuss ‘stock balancing’ – replacing fast-selling items and returning for credit current models that haven’t sold. Retailers should focus on the top 10 to 12 lines for reasons that will be later explained.

Are there any suppliers that have similar closing stock levels but significantly different sales? Look at this example: Supplier One has sales from you of $85,038 with a closing stock of $13,049, while Supplier Two has sales from you of $20,836 with closing stock of $13,017.

Why is there such a huge variance in performance? Isn’t this something to discuss with both of them? Supplier One has a stock- turn of 2.4, which is great (and no, they are not a bead supplier)

With this in mind, should retailers broaden their Supplier One range a little? Should you re-order twice weekly rather than once a week? Does Supplier One consistently have a high-order fulfilment percentage? This occurs when most of the orders are completely filled. Is there anything still on backorder? Why?

Supplier Two has a stock-turn of 0.6 and much of their stock is on consignment and unpaid. Being on consignment is not an excuse; customers don’t know that and knowing it wouldn’t influence them to buy more anyway. That product that hasn’t worked – for you or them – needs to be exchanged as it isn’t doing either of you any good.

Retailers don’t need to analyze this for all suppliers. Focus on the top 10 as these suppliers are probably providing you with 80 per cent of your store sales anyway. Your report may contain three or four pages, but the majority of information is in the top few lines and this is where your attention needs to be.

This comparison of where product is sourced is a very useful exercise. Naturally, suppliers whose products sell well at a good margin are the ones you should reorder from, while those whose product doesn’t sell well should be paired back.

The 80/20 rule is alive and well, when it comes to stock purchasing.

Jewelers need to concentrate their efforts with those suppliers that provide them with the bulk of their sales. The idea is to become more and more important to fewer and fewer suppliers. By being suitably armed with correct information that supports the sales plan, retailers can ensure they are in the best position to make those choices.

The Edge Retail Academy provides customized strategies for retailers and vendors to increase profits, optimize growth, reduce debt, create profitable inventory solutions, build effective teams, and enhance brand loyalty and profitability. The Academy is committed to helping jewelry businesses improve their bottom line while reducing uncertainty and stress. Edge Retail Academy software and its business advisors provide real world knowledge and advice for guaranteed results, all on a “no-contract” basis. Call (877) 569-8657, ext. 1, email Becka@EdgeRetailAcademy.com  or visit www.edgeretailacademy.com.

Originally published in The Centurion.

Merchandising Checklist For The Upcoming Shows

By David Brown, Edge Retail Academy

Omaha, NE–Creating the perfect product mix is an elusive goal–but certainly worth shooting for!

The high energy of a tradeshow is not always conducive to strategic purchasing. Everyone’s excited to see their friends and attend glamorous events, plus factors such as poor lighting, rushing around to appointments (and, of course, those late nights) can affect smart buying decisions. In addition, we always see more compelling product than we have dollars for, which is why before every show we recommend jewelers have a plan and stick to it.

Here’s our checklist leading up to show time. Ideally, you already began planning about a month before, but even if you start now, you’ll still be in a better position to avoid impulsive decisions that can negatively impact your bottom line.

First:

  • Review your Strategic Plan and your Merchandising Plan to refresh your memory as to your objectives
  • Or, brainstorm with your staff on unclosed sales and missed opportunities
  • Compare your YTD results with your objectives. At five months into the year you should have a pretty good idea if you are on track
  • Ask yourself what you are trying to accomplish at the show. Think about what type of product will fulfill your objectives, and what buying strategies will get you to your year-end goals?

Here are a few examples of possible strategies:

  1. Attract female self-purchasers with bold, fun fashion rings
  2. Expand your bridal clientele with new bridal product
  3. Increase margin with in-house branded collections

Next: 

  • Calculate your Open to Buy (OTB), making sure that you allocate dollars to replenishment. Don’t forget to factor in your on-order, accounts payable commitments, GL inventory adjustments, and pending return to vendor. (Note: The Edge Retail Academy can help you create your OTB, if needed; see contact info below.)
  • Start running the appropriate reports that you will need for your buying decisions – by vendor and by classification – to get a general idea of what you need to procure
  • Determine what are your top selling products, and what are your best performing vendors
  • Equally important, review your aged inventory visually – you want to learn from these buying mistakes
  • Start setting up your vendor appointments – don’t count on “swinging by”

2 weeks before the show:

  • Now it is time to get specific! If you have determined a need for bridal semi-mounts – drill down in your reports – what metal, shape melee, head shape/size, price point range?
  • Lower your risk by leveraging your top selling product – is it available in another diamond total weight, with a different size/shape center stone, in a different metal?
  • Print out your Vendor Appointment forms for your existing vendors that you will be seeing at the show
  • Run reports so you can fill in the Vendor Appointment form completely
  • Print out several sets of the New Vendor forms, and any of the Agreement forms that you think you may need – remember, negotiate upfront

1 week before the show:

  • Re-calculate your Open to Buy – based on sales and receiving your dollars may have gone up or down
  • Do not underestimate the importance of being organized and professional in front of your vendors – prepare all your reports and forms
  • Re-confirm your appointments, and get cell phone numbers so you can contact if you need to

At the show:

  • It is pretty easy to get behind schedule at times, but do call your vendors for a heads-up or to reschedule
  • Ideally, get pictures and pricing, so you can review back at your office or store
  • Gather information on potential new vendors, even if you don’t have the OTB dollars this season – start a file for the next show you will be attending

Post show:

  • Once you have all your pictures and pricing, fill out a New Purchasing Analysis Form for each designer, collection or group of like-product
  • Review the forms with your manager, or with your staff and decide what kind of a fit you have with the vendor and which product will help you accomplish your goals
  • Send in your purchase orders with specific ship dates
  • Develop a Product Launch plan, or schedule trainings to ensure the successful sell through of the wonderful product you have just purchased!

The Edge Retail Academy provides customized strategies for retailers and vendors to increase profits, optimize growth, reduce debt, create profitable inventory solutions, build effective teams and enhance brand loyalty and profitability. The Academy is committed to helping jewelry businesses improve their bottom line while reducing uncertainty and stress. Edge Retail Academy software and the unique talent pool of their business advisors provide real world knowledge and advice for guaranteed results, all on a “no-contract” basis.  877-569-8657, ext. 1, Becka@EdgeRetailAcademy.com  or  www.edgeretailacademy.com

This article ran in Centurian.

Edge Retail Academy Adds 4 Industry Veterans to Its Team

From top left, clockwise: Charleen Pfaff, Ben Stahl and Mona Lisa Shaffer have been hired by the Edge Retail Academy to help retailers boost sales and profits, while Shelly Burton Schulz will help retailers maximize their use of Edge Pulse.

 

The Edge Retail Academy has added four members to its team.

Charleen PfaffBen Stahl and Mona Lisa Shaffer are business advisors who will work with jewelers on boosting sales, profits and inventory health.

Pfaff comes from a family of watchmakers. Her father, husband and both of her sons are watchmakers, while her daughter is a senior manager for a leading Swiss watch company. She has 36 years of experience with jewelry store management.

Stahl is a 19-year retail jewelry veteran, joining ERA from a Mid-Atlantic luxury jeweler where he doubled the sales volume of its free-standing store. He also has experience in training and organizational development, as well as retail operations management.

Shaffer has 30 years of retail jewelry experience, GIA and AGS professional accreditation and is driven, intuitive and creative, ERA said.

Shelly Burton Schulz, meanwhile, has been hired to help retailers maximize their use of Edge Pulse, the company’s real-time dashboard of sales and inventory data that aggregates data from 900 stores representing more than $1.5 billion in annual sales.

She has 17 years of sales and marketing experience, most of which were dedicated to helping jewelry retailers increase their bottom line by developing strategies to maximize revenue and preserve margins.

“This is the largest addition to our team in the company’s history,” said Edge Retail Academy President David Brown. “We are seeing increasing demand for our services, and we are delighted to bring in this seasoned group of business professionals to meet our growth.”

This story ran in National Jeweler.

Here Are the 2 Inventory Keys to a Healthy Jewelry Business

By David Brown

In last month’s article, we discussed diagnosing your business from the point of view of profit and cash flow. This month, we will look at the effect inventory can have on the health of your business.

Inventory management is a lot like food: too much of it can be bad for you, but just as equally, not enough can also lead to health problems for your business. You need more of the stuff that is good for your business and less of the stuff that will sit around your financial waistline like a roll of fat!

There are two key areas that determine how your inventory works for you:

1.  Stock turn. You might like to compare this to diet and exercise. In the same way that going to the gym will process more calories, increasing stock turn will allow you to process more inventory. Having the right level of inventory relative to your stock turn is like eating the right level of calories. The more you burn, the more you can have; the less you burn, the less you need. You can choose whether you want to have less stock or increase your stock turn in the same way you can choose between eating less and exercising more. A combination of both works well.

So what are the signs that your inventory is unhealthy? That depends on which department you look at. In the same way that a healthy weight/height combination is different for a 6-foot 4-inch 60-year-old male compared to a 5-foot 5-inch 30-year-old woman, the stock turn for each of your departments will differ. Generally, the higher the item’s price and the higher the margin, the lower the expected stock turn.

Your diamond product, for example, will normally be going well with a stock turn of 1 time per year. Your gold product under $500 might be ideally balanced at 1.5 times per year. Your silver product under $100 or watch selection with lower margin would be best suited to a stock turn of 2-3 times per year. If you are achieving a lower stock turn in these areas, you may have some stock “fatty deposits” sitting around your financial waistline. If your stock turns are higher than this, you may need to increase your inventory “diet” so that you have sufficient fuel to drive your business.

2. Margin. As mentioned, items with higher margins can afford lower stock turns while those with low margin will need to turn their inventory over faster in order to achieve a comparable return on investment. Much like stock turn, margins will differ across categories and departments.

The most effective way to see how your margins are comparing is to view our industry KPI reports, which gather and compare sales data from several hundred stores across the U.S. Contact us at inquiries@edgeretailacademy.com for further information.

David Brown is president of the Edge Retail Academy, a respected force in jewelry industry business consulting, sell-through data and vendor solutions. David and his team are dedicated to providing business owners with information and strategies to improve sales and profits. Reach him at david@edgeretailacademy.com.


This article originally appeared in the May 2018 edition of INSTORE.  

Five Tips To Build Your Bridal Business

By The Edge Retail Academy

Omaha, NE—For any jeweler, building the better-end diamond business is an understandable objective: diamond ring sales represent as little as 2% of volume sold (and effort required) but can contribute up to half or more of a store’s sales. On those numbers alone, it’s easy to see why it should be given priority: it would take a lot of silver earrings to achieve those numbers!

Within diamonds, of course the bridal market is the golden egg, but it is also the most competitive. So, how do you position your store to become the most sought-after place for bridal jewelry?

Let’s take a step back first and ask a more important question: Is the bridal market where my business should be positioned? This may seem like a strange question—rather like Serena Williams asking if she should try to win the U.S. Open—but in many ways, it’s not such an odd question. Why? Because it depends on what game you are best suited to be playing.

Sure, Serena should try and win the Open, provided it’s tennis. If we’re talking golf, then she’s going to be facing much better players. There may be better prize money for the golf tournament, but that’s no consolation if she can’t win at golf.

Likewise trying to play the bridal game when it’s not your strength can result in a lot of effort wasted for minimal returns.

There are many other lucrative diamond areas worth pursuing that can be very profitable. For instance, one store in a small farming town was making good progress with growing their business in all areas except engagement rings. The owners tried everything they could for two years to make this area appealing, but repeatedly lost out to stores in the larger city an hour away.

Eventually they faced the reality that many members of that younger demographic would always prefer the excitement and selection of buying in the city, and they changed their focus. Their market became wealthy farmers’ wives, ages 35-65. They were more loyal, sought a more personal service and, more importantly, had more discretionary money to spend. The jeweler was able to lift the percentage of diamond business from around 8% of total sales to almost 30% over the next few years.

Know your strengths and market and play the right game.

So let’s assume that you’ve asked yourself the most important question, and you still feel that bridal is the best market for you. What can you do to make yourself stand out?

2. Be proactive. The days of the retailer opening their doors and waiting for the public to walk in and buy have gone. You have to look for opportunities. Area bridal shows can be great opportunities here. One of our consultants has built a great bridal business around a formula they have used in their own store: set a goal of what you consider to be your bridal target for annual sales. Determine where you are at now and decide how much you are willing to spend on your marketing to reach this goal. Set the marketing budget and don’t forget to look into co-op advertising to help your dollars go further

3. Get the inventory right. You won’t please the market with the wrong products. Do you have an exclusive brand or private label diamond? Does the average value of your inventory match what you want to achieve in average sale? What percentage of your bridal inventory is old? What diamond cuts and shapes do you sell and does your inventory reflect this?

4. Are your store policies attractive? Do you have an aggressive layaway program? Do you have a strong finance plan? Do you offer trade-in or have a diamond pledge? Is there a point of difference that will make customers come to you? If you want to catch the right fish you have to have the right bait. If your in-house rules are restricting your growth in this area, you need to revise them.

5. Is your staff ready for action? Have they been sufficiently trained to sell diamond product? Do you know who your best diamond salesperson is and do you make sure they get the opportunities to sell diamonds before anybody else?

The Edge Retail Academy provides customized strategies for retailers and vendors to increase profits, optimize growth, reduce debt, create profitable inventory solutions, build effective teams, and enhance brand loyalty and profitability. The Academy is committed to helping jewelry businesses improve their bottom line and reduce uncertainty and stress. Edge Retail Academy software and business advisors provide real-world knowledge and advice for guaranteed results, all on a “no-contract” basis. For more information, call 877-569-8657, ext. 1, email Becka@EdgeRetailAcademy.com  or visit www.edgeretailacademy.com.

Originally published in The Centurion.

Edge Pulse Brings You Important New Insights

Inventory should be in the forefront of your thoughts. One of the keys to growing your store’s sales and profitability is having a healthy inventory of current, fast-turning products.

But how do you get there? It starts with having a clear view of your inventory.

Edge Pulse is the only provider to bring your inventory to life with full color graphs and reporting.

Plus, our latest release of Edge Pulse now includes new Inventory Reports that make it easier than ever to identify aging inventory and take action before it becomes a problem. 

Inventory Trends

With the NEW Inventory Feature in Edge Pulse, you can watch the movement of your inventory over the last 12 months. Watching your inventory age is powerful motivation to implement strategies to improve your overall inventory levels in 2018!

Inventory Aging by Category

You can also view the age of products by category. Is your aged merchandise in diamonds or watches? We can tell you.

Edge Pulse is your dashboard to key business stats — now with brand new inventory features.

Want to learn more? Contact us today.

10 Steps To Better Vendor Visits

By David Brown, Edge Retail Academy

Omaha, NE–Buying well starts with planning well. We all have good intentions when it comes to controlling our buying budget, but often we find ourselves in a reactive situation rather than a proactive one when making our jewelry buying decisions.

What do I mean? Let me ask you a question: How often do you buy product from a vendor representative who arrives in your store unannounced, or with very little notice? If you do this on a regular basis, then you are a reactive buyer.

Often when a vendor arrives you wander out, have a look through the products and spend more money than was intended to be spent. You buy a few items that look nice and will possibly sell, then receive the items a week later – and wonder why there is no money left at the end of the month!

This may be a little simplistic but hands up for those who admit they have had an encounter with a vendor that went like this at some point?

Failing to plan your buying is the single biggest contributor to the overstocked situation that most jewelry stores find themselves in. Trade shows are obvious trouble for those who can’t control their spending, but the silent danger is the regular in-store vendor visits where a few dollars spent here and there soon start to add up. The risk of this can be eliminated though with some sound planning prior to the visit and some good habits while the vendor is in-store (not to mention a couple of steps to follow up after they’ve gone)

Follow these steps to a more controlled buying experience:

  1. Insist that the vendor makes an appointment. Time is precious for both parties. Vendors who arrive without an appointment need to be politely told that unless an appointment is made there will be no looking at the product.
  2. The day the vendor comes, print a stock list of all products carried for this vendor including items no longer in stock. Determine the buying budget and STICK TO IT.
  3. Using a highlighter, mark those items which have sold in less than six months from date of purchase, that haven’t been ordered back in. Ask why they didn’t get reordered. Remember an item that has sold quickly has four to five times the chance of selling again than an unproven item. These should be reconsidered first when looking for new inventory.
  4. Now highlight those items that are aged inventory and have not moved off the shelf. These are stumbling blocks that are tying up cash that could be spent on new or proven items. Make a note to discuss these with the vendor.
  5. If there is access to the Edge Retail Academy AdvantEdge software program, print a list of good sellers for this particular vendor. This will provide a list of this vendor’s inventory items that are selling well in other stores. This is the perfect starting point for choosing new product as these items are selling well elsewhere, so there is a good chance they may sell well in your store.
  6. When the vendor arrives, ask firstly what they can do to help clear the old/aged product. If the items aren’t too old, many vendors will consider exchanging them for other pieces. Take the dollar value of what can be exchanged and add this amount to the existing budget to determine what can now be spent.
  7. Once you’ve dealt with the old/aged product and discussed the vendor’s fast selling items, its then time to look at what else is new, and as yet, unproven. This is your time to experiment – not before! Make sure this is only a small percentage of your buying budget – ideally less than 20%.
  8. Always ask if the items being bought are exchangeable and if anyone else in the area will be stocking them. Now is the time to set the ground rules.
  9. Arrange delivery dates for when the product is needed. Deferring delivery to the first of the following month or the completion of a sale will provide an extra month’s credit to pay. Now is the time to negotiate any deferred settlement terms
  10. Get the new items on the shelves as soon as they arrive and make sure items that are being exchanged are returned promptly. A little training for your staff when new items arrive, is also essential!

Follow these simple rules and much of that frustration of carrying too much inventory will start to disappear. And, as always, if you would like more strategies, for the healthiest inventory picture for your business, please reach out and we can help!

The Edge Retail Academy provides customized strategies for retailers and vendors to increase profits, optimize growth, reduce debt, create profitable inventory solutions, build effective teams and enhance brand loyalty and profitability. The Academy is committed to helping jewelry businesses improve their bottom line while reducing uncertainty and stress. Edge Retail Academy software and their business advisors provide real world knowledge and advice on a “no-contract” basis. (877) 569-8657, ext. 1, or www.edgeretailacademy.com.

Originally published in The Centurion.

The Five Things You May Not Realize About Stock Turn

Knowing your turn ratio is one thing, but understanding how to use it is another.

Stock turn: that elusive nirvana between having too much and not quite having enough products to drive your sales. Getting the balance right can be challenging because it is always a moving target.

You may have a good grasp of stock turn and how to calculate it, but here are a few significant facts that may affect how you look at it.

1. Stock turn is only one part of the return on investment equation. The other is margin. You can afford to have your inventory sit around a while if you have the profitability to handle it. The lower the margin on an item, the faster you have to turn it over to achieve the same profit.

2. Freight needs to be part of the equation. All too often, I see jewelers who don’t add freight in as part of the cost of the item. The problem with leaving it out is that the faster your stock turn, the more it will cost you as each item gets shipped. Ignoring it will distort the profit on your product and give you an artificially higher margin than you really have.

3. Fast stock turn can be as bad as slow. If your inventory is turning over too quickly, don’t celebrate — it is possibly a sign that demand is beginning to exceed supply and you will be losing sales as a result of this.

4. Accurate stock turn can only be measured over time. Take a snapshot of a week or a month and the figures can deceive you. Stock turn is calculated using your average inventory holding between two periods. If those periods are seasonal, such as December, the numbers can deceive if you don’t take this into account.

5. Stock turn can predict the future as well as show the past. Too often, I see retailers who analyze their stock turn but don’t use it as a basis of prediction. History does repeat, and if you find trends developing around certain areas, it helps to use them to plan future inventory levels across that area.

An awareness of stock turn is one thing, but knowing how to manage it and use the information to drive your business is the secret to getting the most value from this key financial variable.


DAVID BROWN is president of the Edge Retail Academy. To learn how to complete a break-even analysis, contactinquiries@edgeretailacademy.com or (877) 569-8657.

This article originally appeared in INSTORE.

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