Edge Retail Academy Blog

Store Performance Review

by David Brown


Review and conquer, with the New Year, here! You should already be in the middle of planning your strategies for 2017. Smart retailers will take this opportunity, to review what went well and what could have gone better in 2016.

 Starting now, it’s the perfect time for retail owners to sit down and have a good hard look at how their businesses are and have been running.

Although ongoing performance monitoring is important, it’s also critical to dedicate a particular time of the year for setting some clear goals and asking some strong questions about where you have been and where your business is going.

This exercise is worth doing with the whole year in perspective. Why review what is already history you may ask? If you don’t learn from history then you are destined to repeat it. If business wasn’t as good as expected, then the last thing you would want is to repeat it!

Below, are some relevant areas within a business and the types of questions that should be asked.

Marketing

  • Did you spend more or less money on marketing activities compared with previous years?
  • Did that reflect in more or less customer traffic?
  • Were there items marketed that created high demand?
  • What effect did you notice from competitors’ marketing
  • What will you do differently for the next year?

Inventory

  • Were there product categories that were short of product, thus resulting in lost sales?
  • Was this a purchase issue or a continuity of supply issue (i.e. a buying issue or a supplier issue)?
  • Were there any customer product requests that you could not satisfy or offer an alternative? Were there any issues with re-orders that potentially cost sales in December? If so, how can these be minimized?
  • Were there any issues with product quality (This could have a negative impact on staff confidence with the brand/supplier)?
  • Did the items you purchased, sell?
  • How much aged inventory did you successfully target and sell?

Vendors

  • Were there vendors who let you down with re-orders?
  • Have you made them aware of this? What will you do to stop this being repeated?
  • Were there any vendors that had sales that exceeded your expectations?
  • What do you plan to do about this?
  • Were there vendors that you had Memo product from? How did this perform?
  • Have you returned the balance and paid for what you sold?

Staff

  • Were you happy with the staff’s performance?
  • Are there any members that need recognition for exceptional performance?
  • Are there any that need re-focusing because of poor performance?
  • Did you give team members enough direction and motivation? If not, what is your plan to change that?
  • Could you have allocated hours better?
  • Did you have your best people working during peak times?
  • Could they have benefited from some additional training?

These questions have not been developed as a complete or exhaustive list but should rather act as a catalyst for jewelers to ask better questions regarding themselves and their businesses.

Moving Onwards and Upwards

Now it’s time to look forward. This means setting some Key Performance Indicators (KPIs) and asking how these numbers ideally should look – again both for the year ahead and for the next December’s sales goals.

Sales, Gross Profit and Net Profit

  • “Most people aim at nothing and hit it with remarkable accuracy.”
  • What are your sales, gross profit and net profit targets for the coming twelve months? A clear goal will increase the chances of hitting targets, which is the most important goal of all.

Inventory Levels

  • Do you have too much, too little or just enough stock?
  • What do you need to achieve your sales goals?
  • What’s the plan for obtaining your optimum inventory level?
  • What does your aged inventory status look like?

Debt Levels

  • If you have debt – both personal and business – what targets are in place for reducing it?
  • Are these targets broken down monthly so you know how much you want to see your debt dropping throughout the year?

Owner’s Hours

  • What hours do you plan to work this year?
  • Will you do more or less?
  • What would be your ideal workload in the coming 12 months?

Finish by Following this Formula …

 Four Key Areas that Business Owners Should Address:

  1. What should you do more? This involves looking at what worked well – either by careful planning or sheer good fortune – and whether these processes can be expanded.
  2. What should you do less? Think about the biggest frustrations over the past year and how you can have less of them. Delegation is at the forefront here.
  3. What should you start doing? Don’t procrastinate; make changes now!
  4. What should you stop doing? Are there product lines that are no longer profitable or staff members who are no longer an asset to the business? Are there activities/tasks that now appear pointless?

If you want the next Holiday season and 2017 to be different from previous years, then plan ahead now. It’s never too early or late to make New Year resolutions!

 For retailers who are looking for even more guidance on how to make positive changes in the year ahead, we are happy to assist you. If you are interested in a complimentary business opportunity analysis, please let us know that as well. 877-569-8657, ext. 1 or Becka@EdgeRetailAcademy.com

It’s Trade Show Season – Are You Prepared?

by David Brown


The next few months promise to be busy one’s for most stores, with trade shows and group meetings taking up a good chunk of the calendar. Often, depending on their store location, this presents the only opportunity for some store owners to meet with other store owners and to purchase from vendors.

Attending a trade show or buying meeting can involve some cost, but presents many opportunities to gain valuable insights and information for your business. Like any investment however, you need to make sure you maximize your return on the time spent there. With accommodations, airfares, meals and entertainment, sometimes for more than one person, it is crucial to plan your trip to ensure you make the best use of your time and give yourself every opportunity to take advantage of the knowledge and buying opportunities that will be presented.

Below, are a few of the key steps you need to do before heading to each show:

  1. Set yourself the goal of learning one strategy from a colleague or consultant that will pay for your trip. I know one retailer who was always watching for the “ ah-ha!” moment from each show or meeting he attended. This would be the one idea that he could implement in his store to cover the cost of the trip. He never failed to come away with that one idea everytime, mostly because he was looking for it. Make sure you are watching for that “ ah-ha!” moment at your buying meeting. Make an apppointment with someone who can help you work on your business – either a consultant or a colleague who you admire and respect. Again, making that appointment lets them know you value their time and knowledge and makes it clear that you have a purpose.
  1. Schedule appointments with your key vendors. Yes, you need to make time to chat with people along the way but setting up times to go and see your key vendors gets you better organized and let’s them know you value their time as well. Once an appointment is scheduled it forces you to get organized before you go, as opposed to simply wandering from booth to booth.
  1. Determine your objective from each vendor. You may be looking for new product or wanting to discuss exchanging existing product with the vendor. Whatever it is, have a goal of what you want to achieve from the meeting. Make notes ahead of time, to help remind you of the important topics and strategies to discuss.
  1. Get your printouts done before you go. The key reports you will need are:
  • Inventory report by vendor
  • Sales report by vendor
  • Stock by Age report

Use your Stock by Age report to determine what departments have too much inventory and identify where more product is required. You can then use the inventory report by vendor, to look at particular products for that vendor. Ask yourself questions such as:

  • What product does the vendor have that I might need? (software such as AdvantEdge, can help you pinpoint what is selling well elsewhere, that may sell well for you)
  • What product from the vendor is not selling for you? Now is the time to discuss this in more detail with them. Are they able to help? Can they make any suggestions?
  • Use your sales reports to look at what has sold that you haven’t reordered. Should you get it back in?
  1. Ask yourself what area of your business most needs work. Is it your marketing? Then seek out someone who can help with this area. Do you need to develop your staff communication? Then look for help on this subject. Is your inventory out of control? Then there is advice to be obtained on this. Guest speakers are at many of these events and have a wealth of knowledge to share. Make sure you take advantage of this.

There is no reason, with careful planning, why a buying meeting, or trade show can’t yield some wonderful opportunities for any progressive retailer. Making sure you plan ahead, will give you the best opportunity to use these events as a springboard to new growth.

One of the services the Edge Retail Academy offers, is an Open To Buy plan, prior to attending any trade show. We will help you determine your optimum inventory level, then teach you how to keep it there! Please let us know if this would be helpful for you. Becka@EdgeRetailAcademy.com or 714-925-2456

The 5 Stages Of Profitable Retailing, Part 1

by David Brown



Having been around this industry for more than 20 years, it takes a bit for me to get excited about something new … let alone a retail epiphany.

But that is what happened to me recently, and I want to share that experience with you!

In this first article, I will be discussing stages 1 to 3 of the 5 stages. Before I get started, here are the 5 Stages:

  1. What to do before you buy
  2. How to buy better
  3. How to sell what you buy
  4. What to do if it sells quickly
  5. What to do if it doesn’t sell … your Exit strategy

You might be asking, so where’s the epiphany? Granted we have probably all heard of these stages in one form or another, but it’s the combination, and order of them, that caused me to have the “aha moment”.

Just as a good recipe helps us recreate a proven formula for baking the perfect muffins, if part of the recipe was missing key ingredients, or was wrong, the muffins would become a flop. What if the ingredients were wrong, or the quantities, or the sequence or the cooking instructions … what then? Well I can tell you, if you mixed all of the ingredients perfectly but forgot to put them in the oven, or if you put the ingredients into the oven before you combined them … you’d have a baking disaster!

A bad batch of Muffins is not such a big deal in the grand scheme of life, but if you apply the same principals to your retail business, it quickly becomes a big deal.

Imagine the financial carnage of buying more than you can afford, or of buying the wrong product for your market, or buying from vendors who can’t replenish, or not being able to sell what you bought … or maybe you don’t have to imagine it. Maybe you’re living with the consequences already … poor cash-flow; mounting payables or debt; a low return on your investment; aged inventory costing you 20% every year it sits there, etc. … sound familiar?

But on the positive side, if you follow this retail recipe and give equal and careful attention to each of the 5 stages, you will not only buy better, sell better and manage better, you will have a sustainable retail business model and money in the bank to provide for your family, your lifestyle and your retirement.

Stage 1 – What to do Before you Buy

Before you go to a show, sit down with a vendor or place any orders (other than re-orders) you need to know what you’re trying to achieve i.e. you need a budget and a plan to achieve it.

But not just any budget … you need a GAP budget.

I know, I know … for many of you, budgeting and numbers are an area of your business that you either don’t understand or enjoy. But most of you would admit that budgets are a key part of the business that shouldn’t be neglected.

Let’s face it, you wouldn’t dream of building a house without a plan, or even taking a trip without a map or a plan. So think about how dangerous it is, to go along day-by-day in your business without any clear objectives in mind.

Budgets are little more than goals for your store to achieve. A study of Harvard graduates in the mid 1950’s showed that only 3% of the graduating class had any clear written goals for when they completed their study. A follow up some twenty years later discovered that the same 3% of students had amassed a level of wealth more than the other 97% of graduates combined! Do you have a truly meaningful budget (one that meets the owners short term (this year), medium term (5 years) and long term (retirement) financial goals? How about a general idea of where you ‘want’ to be (normally based on last year plus a percentage increase)? Or do you rely on ‘hope’ as a strategy?

Before setting a budget, it is important to prepare a GAP analysis – where the owner determines the gap between the businesses current performance and where they need it to be at the end of their remaining working life. A business owner with 10 years working life and $100,000 in savings will have a lot more work to do if they want $1 million in retirement savings compared to an owner with $500,000 already saved and 20 years of working life ahead of them. Determining your savings and lifestyle needs and working backwards to determine the levels of profit needed to meet those needs (and hence the level of expenses, gross profit, sales and ultimately inventory you require to reach that profit) is the most effective way to set your budgets.

The ‘GAP Analysis’ includes:

  1. The ‘Net Profit’ you need to pay your operating expenses (including a market salary for yourself); to get an appropriate return of your ‘capital investment’ and to provide for your retirement
  2. Based on 1. above, the ‘Gross Profit’ Gap or difference between the required and current Gross Profit
  3. Based on 2. above, the ‘Sales’ Gap between required and current sales
  4. Based on 3. above, the ‘Inventory’ Gap between your required and current inventory and to deliver an acceptable Gross Margin Return On Investment (GMROI) – anything less than 100% ($100 of Gross Profit from every $100 of Inventory) is unacceptable.    

Other considerations before you start to buy include:

  1. What type of store are you or do you want to become? For example, if you want to become more of an upscale Bridal store, that will determine which vendors you talk to and what type of product you buy.
  1. What is your growth strategy? There’s an old saying ‘you can’t shrink your way to greatness’ but you also can’t spend your way to riches. If you’re a $2m store with the potential and desire to become a $5m store, you will need more inventory than a $2m store needs (otherwise how else can you grow?) but not enough for a $5m store or you’ll have major funding issues … not to mention a lousy GMROI.
  1. You will need an Open to Buy (OTB) budget to control the flow of money as it washes through your business.

Once you know ‘how much’ money you have to invest, carefully plan where to invest it e.g.:

  • Which categories and price points
  • Your required Key Performance Indicators (KPIs) i.e. the margin you need, the average retail value you want to achieve etc. and work backwards to the buying price
  • Which vendors to invest with
  • Prepare a list of items to research/buy, vendors, fast sellers, current aged inventory
  1. Local and Industry Market Trends. Are there products or vendors making a move (in either direction) that you need to be aware of?
  1. Your own brand is the most important asset you have, but what about other brands that could give you an ‘edge’ in your local market?
  1. Philosphically, we believe that it is better for you to become more and more important to fewer and fewer vendors. Don’t just order from existing vendors because you always have … analyze their performance i.e. GMROI, their terms and their ability to replenish quickly. Also check out the comparative performance and terms of new vendors who supply the same or similar product.

Stage 2 – How to Buy Better

Now you find yourself at a show (or sitting in front of a vendor) complete with your OTB budget, your new product list, a list of vendors to talk to (new and existing), your aged inventory reports (by vendor) and a very clear idea of what you want to achieve.

There’s a lot going on at Shows including social events, tempting offers, Show specials etc., so it can be hard to stay focused and on track with your plan. As a rule of thumb, if it’s not in your plan or your budget, research it by all means, but sleep on it before you act on it. If you feel the same way by the end of the show or when you get back home, fine, trust your judgement … but if you’re making an emotional decision, think carefully. Remember, you still own 80% of what you bought at previous Shows after 12 months and 60% after 2 years. Those are not the sort of odds you need for your retirement.  

Shows have several major benefits and purposes amongst them, networking with your fellow retailers, meeting with existing vendors to further enhance the relationship and to research new products, new vendors and new trends.

Assuming you have existing terms in place, Shows give you the opportunity to sit down with existing vendors and balance your investment e.g. more of the product that has sold for you and less of the product that hasn’t. But first a word of caution. Your relationship with your good vendors is symbiotic in nature i.e. you need each other, it is not a conquest where you win and they lose or vice versa. To ask vendors to take back product that is already 12 months old, that you were slow to pay for first time around and you haven’t diligently re-ordered the product that did sell quickly, is frankly unfair and unsustainable (for them).

Good vendors don’t want you to be sitting on product that isn’t selling because it’s costing both of you money … but only if you’re one of the few retailers who re-order immediately and pay quickly. What vendor wouldn’t want to work with a retailer who pays quickly and takes responsibility for selling and managing their product, not just buying it?

Talking to other, successful retailers (ideally who already own the type of retail business you aspire to become) can help you identify vendors, brands and trends that are either on the way up or on the way out.

Here are some tips for hiring a new vendor:

  • Research:
  • Network at Shows and ask other retailers about their experience
  • Research Trade Magazines & Trade Organizations
  • Ask for referrals or testimonials and actually check them out
  • Make sure they are a good fit for your current and future business model. Are they a good personal fit for you i.e. do you trust and like them?
  • What is their experience, track record and history in this market segment?
  • Clearly articulate the expectations of the relationship, what I call the ‘Upfront Contract’:
  • What you expect from them
  • What they can expect from you
  • Ask for exclusivity in your area (subject to you achieving minimum performance expectations).
  • At the very least, find out what other retailers carry the product, or are likely to carry the product, in your area.
  • What ongoing support do they offer e.g. displays, training, packaging, brochures etc.
  • Establish the quality of the product i.e. what assurances does the vendor offer and what do other retailers say about it.
  • Establish terms i.e. payment terms, stock balance privileges. If you really want to negotiate better terms, pay as soon as possible (preferably before they even expect to be paid) and re-order everytime it sells until it stops selling (not until your staff ask you to get something different).
  • Establish delivery expectations:
  • Lead time for the initial order
  • Lead time for re-orders (this is super important)
  • Lead time for ‘Special Orders’
  • Go with a ‘Hit List’, based on your OTB budget and be prepared to ‘research’ other new product they recommend.
  • Think about your ‘Exit Strategy’. I know we like to think everything we buy is going to sell, but I also know the facts that on the law of averages only 20% of it will sell quickly, so before you put anything on paper, ask yourself ‘what will I do if this product doesn’t sell within x days?’
  • And remember, an item that sold quickly the first time has an 80% chance of selling quickly again the next time, whereas, if you take that same money and speculate with it, it only has a 20% chance of selling. Are you are business entreprenuer or a gambler?  

Stage 3 – How to Sell what you Buy

We all know that the first two stages are the easy part. You all find buying easy (we can tell by looking at your reports!) … Now we need to work on strategies to sell it.

If you put at least as much thought, time and effort into selling it, that you did into buying it, the chance of it selling increases exponentially, but sadly, most stores put a price ticket on it when it arrives at the store, put it in the showcase and ‘hope’ it sells.

Just as you needed a ‘Buying Plan’ at the front end, you now need a ‘Selling & Merchandising Plan’ to move it successfully.

This was when I had my epiphany and it involves taking a lesson from the successful ‘Chain Stores’:

  • Launch it to your staff first (there’s a novel idea):
  • Sell them on why you bought the product rather than just tell them to sell it
  • Create excitement and enthusiasm and invite feedback
  • Unveil the collection and let them touch it, feel it and try it on
  • Explain your USP … your Unique Selling Proposition for the product
  • Explain the marketing campaign – how you plan to let your customers know you have this new product. You can’t sell a secret.
  • Explain the Merchandising plan – how you plan to display and promote the product instore, such as brochures, packaging, displays etc.  
  • Ask the vendor to help with staff incentives (they want you to be successful with the product too), Ideas:
  • Contests
  • Gifts
  • Financial incentives
  • Points towards product purchases
  • Train your staff on how to sell it:
  • Bring in the vendor to train your team if it’s a significant new range and opportunity for your store.
  • Train ‘Product Knowledge’ and ‘Selling Skills’ … how to sell the story of why this product is special/different. Competence builds confidence.
  • Role Play until you are certain your team knows how to ‘show and sell’ the product with confidence and skill.
  • Then Launch it to your customers:
  • Throw a party for your special customers
  • Get your sales associates to Clientele their customers
  • Help customers create wish lists
  • Create a unique customer experience. Remember, good service only stops customers speaking badly about you, it takes exceptional service to have them talking enthusiastically about you!

In summary:

  • Find the right vendor partners
  • Research and select the best product
  • Plan how to sell it
  • Unveil it to your sales team
  • Train your team on product knowledge and sales skills
  • Launch it to your customers
  • Create a unique store experience
  • Manage it if it sells quickly … or not
  • Enjoy your well-earned success

In Part 2 of this article, we will discuss Stage 4 – What to do it if Sells Quickly and Stage 5 – What to do it is Doesn’t Sell – Your Exit Strategy.

If you have any questions or need customized strategies for your store, based on any of the ideas and details we mentioned in this article, please reach out so we can talk further about your needs.

Stay tuned for Part 2…

Four Key Areas for Sound Fiscal Management


Most independent jewelry store owners are wearing many hats. Most are functioning as Head of HR, Vendor Relationships, Client Development, Advertising and Marketing in addition to some may be operating as Head of Sales or Design. Chief Financial Officer is a role that can sometimes taka a back seat, or seem overwhelming with so many accounts and financial statements to look at. Managing these many roles is a matter of prioritizing your efforts, and streamlining whatever tasks are possible. When looking at your financial statements, there are four key areas to focus on:

Inventory:

Inventory is a working asset, that generates almost all the store revenues. Inventory management is critical to the success of the store. Questions to ask when evaluating inventory include:

  • What is the right amount of inventory to carry? Since most of the store’s capital is used to support this asset, having too much can be a drain of badly needed cash, but not having enough inventory can cause the store to lose sales.
  • What is the right composition of inventory? Having a proper balance between quick sellers and more expensive longer sales cycle merchandise will yield optimum results.
  • Is my inventory marketable? Whether an accessory item to a person’s wardrobe or a long-term keepsake, an inventory needs to be relevant and appealing to customers.

Debt:

  • A combination of liabilities and equity is how assets are supported. Too many debts, or liabilities require repayment, and can incur interest charges. These repayments and interest expenses can eat into cash flow.
  • The ratio of liabilities to equity should be correlated to a Company’s recurring and predictable cash flow.
  • As balance sheet leverage increases (total liabilities outweighing equity) cash flow to support that leverage needs to increase.
  • More moderate balance sheet leverage, with total liabilities less than equity demands less cash flow to support. In the jewelry industry, the longer sales cycle of higher priced items can slow down cash flow, along with economic cycles and seasonal ebbs and flows.

Profits:

Most business owners focus on total revenues and net profits. Questions a business owner should ask:

  • What is the “Breakeven” level of sales?
  • What are the trends in my revenues, and how do they compare to the industry?
  • What are my net profit trends as a percentage of my revenues? Is my net profit margin growing or shrinking?
  • What return on equity are net profits yielding? Don’t forget to consider owners’ wages as well as net profits when considering return on equity.

Cash Flow:

This is the biggest challenge for most business owners. An expanding business may require more cash than a company can generate to support growing working capital needs. Cash flow can be a better measurement of a company’s financial health than net profits.

  • Most measurements of cash flow include adding net profits to non-cash expense items such as depreciation.
  • Activities other than operating profits that add to cash flow include selling assets, such as inventory or collecting receivables, new liabilities such as lines of credit, or injections of capital from owners or investors.
  • Activities that decrease cash flow include increasing assets, such as higher inventory levels, or capital expenditures on equipment. Other activities that decrease cash flow include paying down liabilities such as accounts payable, credit cards, lines of credit or term loans. Deductions from equity, such as dividends or S-Corp distributions decrease cash and can be a drain on a company’s cash. Distributions more than profits can result in increased reliance on debt to support assets.

By managing these four key financial areas, an owner will be able to quickly assess the health and direction of their company, then have time to get back to managing HR, Vendor Relations, Advertising and Marketing and all the other responsibilities of a busy jewelry store owner.

If you would like more assistance to help ensure your finances are in the healthiest shape for 2017, please contact us and we will get you started on the right foot for the year. 714-925-2456 or Becka@EdgeRetailAcademy.com

Retail Business Health Check



by David Brown

We all know that being overweight cause’s significant health problems such as high blood pressure and cholesterol which can lead to heart problems and impaired performance.

Because all humans are different, Doctors have Height/Weight charts that tell you your recommended weight, according to your height. There are ‘tolerances’ on either side of your optimum weight, but go beyond those tolerances and you are considered either ‘obese’ or ‘underweight’, and at risk.

So is it any different with a business? Just like humans, Jewelry stores come in all shapes and sizes and the weight of your business (your inventory) should be relative to the height of your business (your sales).

Too little inventory (underweight) will ultimately lead to a drop in sales just as too much inventory (obese) will lead to other business health issues.

Your Stock to Sales Ratio (Obesity Test)

One measurement of your business health is your store’s Stock to Sales Ratio (S2S). It is a simple calculation of your Sales/Inventory for example $1m of retail sales divided by $500,000 of inventory equals a S2S ratio of 1:2 ($1m/$500k = 2). What that means in practical terms is $1 of inventory produces $2 of sales.

To be accurate with your ‘Obesity Test’, you need to remove service/repair sales and custom work. So, let’s say your $1m store does $150,000 from services and custom work. That leaves $850,000 from showcase sales so your S2S ratio would be calculated by dividing $850,000 by $500,000 which equals 1:1.7 ($1 of inventory = $1.7 in sales).

So, is that ‘healthy’ or not? Well, if you think that ‘Keystone’ and a 1 times Stockturn (it takes 12 months for inventory to sell) are acceptable, then a S2S of 1:2 is acceptable … but only acceptable. It is certainly not the peak of good health.

To illustrate this, we will use $100,000 of inventory as an example. See the Business Heath Chart below:

Business Health Chart

Vital Statistics

Vital Statistics

1.       Inventory

$100,000

$100,000

2.       Stockturn

1

0.9

3.       Cost of Sales (COGS) Fig.1 x Fig.2

$100,000

$90,000

4.       Markup %

100%

90%

5.       Gross Profit (GP) Fig.3 x Fig.4

$100,000

$80,000

6.       Gross Sales Fig.3 plus Fig.5

$200,000

$170,000

7.       Stock to Sales Ratio (S2S) Fig.6 over Fig.1

1:2

1:1.7

Note: There is some minor rounding in the 1.1:7 example above.

We believe that a S2S ratio of less than 1:2 means the store is ‘At Risk’.

Some of the symptoms of an S2S ratio of 1:2 or less are typically:

  1. Cash-flow problems
  2. Minimal Net Profit for the owner’s wealth creation
  3. A poor GROI (Gross Return on Investment)
  4. High levels of Aged Inventory
  5. Possibly having to Discount to sell aged inventory
  6. Stress and burnout

Any of those sound familiar?

See the S2S Chart below for a guideline on your business health:

Business Health Chart

Obese

Acceptable

Healthy

Underweight

Stock to Sales Ratio (S2S)

Less than 1:2

1:2 to 1:2.5

1:2.5 to 1:3.5

Over 1:3.5

$1 of Inventory produces

 

Less than $2

$2 to $2.50

$2.50 to $3.50

Over $3.50

Important: These are guidelines only and may vary depending on other market and regional factors. As a matter of interest, the average US Jewelry store has a S2S ratio of 1:1.2 (only $1.20 of retail sales from every $1 of inventory). In other words, very obese and at high risk of serious health problems!

Obese in practical terms, means you have too much inventory for your current sales. Another way of looking at that is that you have too few sales for your current inventory!

Underweight means you have less inventory than you need to ‘sustain’ your current level of sales. You will certainly struggle to achieve any sales growth.

A Healthy S2S ratio should allow for good returns and sustainable growth, however, the ratio may drop at times when you are planning for aggressive sales growth.

Action Steps:

  1. Diagnose your own Stock to Sales ratio
  2. If you are ‘At Risk’, diagnose specifically what is causing it. For example, is it a low stockturn or a low margin (or a combination of both)
  3. There are numerous ‘Prescribed’ and proven remedies depending on what needs to be fixed. We can help you with these strategies!
  4. Implement the remedies until your S2S returns to a healthy range.

If you would like The Edge Retail Academy to do a health check on your business, please reach out to us for a complimentary Business Opportunity Analysis. Becka@EdgeRetailAcademy.com or 714-925-2456

Special Orders vs. In-Stock Items

As with all KPI’s (Key Performance Indicators) it is important to keep your eye on the items you’re special ordering.  Special orders are your client’s way of telling you that you don’t have what they’re looking for.  And with so much invested in the stock that you already have, we want to minimize having to order items as much as possible.

We understand there will always be special orders, that we can’t have every item our customers want but if it seems like you’re doing a lot of special orders, then you probably are.  What are these pieces?  Do they have anything in common?  Are they similar to other pieces that you already have?  If so, what were the objections to your existing stock over the item that was special ordered?

The Edge & Edge Pulse can’t answer all of those questions for you but we can help you track and analyze your special orders which in turn could help improve your existing stock.

In The Edge:

  1. Using Reports – Inventory – Sold – by Category/by Vendor reports and using the Stock Type Special Order, you can see every special order (with pictures) for a determined time frame.  Are you ordering a lot of items from a specific category or vendor?  Have you ordered the same item multiple times?
  1. Using Reports – Rapid Reorder report you can see your fast selling items each week.  A fast selling item is a great indicator that you got the right item in.  Re-ordering these items quickly shows that you’re listening to your customers and will have want they want when they come in.

In Edge Pulse:

  1. On your Edge Pulse Dashboard you can see the percentage of your sales for the day/month/28 days that are being done through special orders.  A green, yellow and red gauge indicates if that sales percentage is too high, too low or just right.  Keep your eye on this each month and discuss with your associates if the numbers become out of line.  Why are we doing so many special orders this month?
  1. Once you’ve identified specific vendors or categories where you seem to be doing a lot of special orders you can use the AdvantEdge report to help you look at fast selling merchandise in those categories or vendors that may be the same or similar to the items that your customers are telling you they want.
  1. You can also use the Superstore & Market Trending report to see if the category and/or vendor you’re looking at is trending up or down.  Are you customers pointing you in the direction of a new trend?!

With an Edge Retail Academy Mentor:

  1. You can utilize an Edge Retail Academy mentor to help you understand & implement strategies in your business that are unfamiliar or a challenge.  The Edge Retail Academy mentors are here for you to help make sense of it all and to help you grow.  Inventory control is a key area that you may need a mentor for and only scratches the surface of what a mentor can do for you.

 

Wish Lists

This time of the year, creating and utilizing Wish Lists is a key strategy for a successful season!

In The Edge:

  • You can use POS to add both inventory and non-inventory items to a customer’s wish list.
  • These wish list items can be sent directly to the recipient of the item or they can, based on your set up, choose to email or text the person they want to buy the item for them.
  • You have the ability, to report on wish list items to be used to clientele for sale events, trunk shows and even upcoming birthday & anniversaries.

In Edge Pulse:

  • Use the Performance – Sales Associate feature and the Other Details KPI to see how well your individual associates are at creating wish lists and if they’re converting wish list items into sales
  • Use the Performance – Store/Business features and the Other Details KPI to see how well you’re doing at creating wish lists and converting wish list items into sales. These features allow you to see the store as a whole!
Edge Pulse wish-lists

The Edge is your everyday tool that gets the job done and your Edge Pulse is your up-to-the-minute tool that keeps your finger on the PULSE of your business!  A powerful combination!

Complimentary Business Opportunity Analysis



As you near the end of 2016 and start preparing for 2017, you may enjoy a complimentary Business Opportunity Analysis, provided by The Edge Retail Academy. We will review your inventory reports, combined with your financials, in order to identify areas of opportunity and risk in your business. This analysis will point you to the areas of your business that require your attention.

If this is something that would be helpful to you as you start the New Year, please contact Becka Johnson Kibby at 714-925-2456 or Becka@EdgeRetailAcademy.com, and she will get you set up.

Holiday Tips #3 of 3


  • STORE – Train ALL of your staff to follow a checklist each morning and evening: dusting, tidying, eliminating clutter, replacing lightbulbs, restocking, etc., to make sure your store is fully ready for sales and offers the best experience for your customers. The store is busier now and generally brings in a significant portion of your holiday sales. Make sure you’ve remerchandised to fill any holes and to refresh your cases.
  • SALES – Focus on upselling and add-ons with your staff. Try showing a few pieces that are slightly over the suggested budget. Suggest complementary pieces and be sure to ask your customer who else is on their gift-giving list. Tip: you’re offering great service by helping your customers shop in one place. At your team meeting, review your turnover strategies and role-play to make the most of every opportunity. Every person that walks into your store is a possible sale! Have fun by initiating contests (largest sale, highest ticket, most units, most add-on’s, etc.), to keep things fun and exciting for the staff.
  • MARKETING – Edge users: review your “Why In” report frequently to track your marketing. While most advertising is set, you may identify that certain emails or social media marketing is effective in driving sales, or ineffective, and you can modify your digital marketing accordingly. Feature in store/stock items. Make sure your message has a sense of urgency and a call to action. Schedule your last week of posts for your social media such as last minute gift ideas. Recognize your faithful customers by sending out small holiday gifts to them. Keep a supply on hand in your store, to give away to your regular customers. People often want to reciprocate so this can lead to more sales!
  • STAFF –Share your month to date figures. Celebrate any and all wins! Schedule food deliveries for your team. Share your appreciation for their hard work.

After Holiday Tips…never too early to start thinking about!

  • FINANCIAL – Chances are you will have more money in your bank account after the Holidays, so you need to make sure you spend it wisely.
    • Set aside enough money for sales tax and federal and state income tax
    • Pay off debt – credit cards, vendor debt and interest bearing loans
    • Start an emergency fund for 2017 worth 3 times your monthly expenses
    • Invest your money – max out your 401K
    • Take a distribution or bonus from the company after the first 4 above have been accomplished