Managing Inventory In Tough Economic Times

I think we have all faced it by now – retail is tough out there. It doesn’t just seem like stores are closing and customers aren’t spending any money, but rather stores ARE closing and customers AREN’T spending any money. So how, after accepting this brutal reality, do small business retailers survive in what is the worst economic crisis since the Great Depression?

Unfortunately, not everyone business owner will survive the terrible reality of our economy right now. That’s the ugly truth, like it or not. But you can make changes and complete actions that may help keep you afloat.

Inventory Control

Whether a boutique, store, or franchise owner, taking access of your inventory is extremely important right now. You need to be aware of what you have sitting on your shelves both on the store front and in the back stock room. Be aware of what has sold and what isn’t selling, and make plans to find balance between the two. While it’s always important to stay on top of your inventory, now more than ever you need to be aware of your top sellers. Ask yourself a few key questions to help understand why they are your stop sellers.

1. Have they always been your top sellers?

2. If not, why do you think they are now?

3. Are there other products that would compliment your top sellers and potentially sell as well?

Likewise, determine what have become the worst sellers in your inventory and make plans to get them out your door as soon as possible. Easier said then done, yes. However, it needs to be done – even if you have to take a loss on some of your product purchases. Letting them sit on your shelves and make no return at all for you is worse than at least recovering some of your initial investment. By doing this, you may allow yourself to afford smarter purchases for your business today.

A few things you can consider when determining how to move inventory that has not been selling include the following.

1. Call your vendors to see if they would buy back the product you purchased from them. While not all vendors do this, some will consider it depending on your contract, your relationship, and your future business opportunities with them.

2. Markdown your inventory right away if you haven’t already. Don’t just mark it down to 20%, but price it to sell with markdowns of 40%, 50%, and more. Remember that other stores have already done this and customers today know they can get a deal if they look for them. The plan is to get the product out the door, allowing you to purchase new inventory that may sell better.

3. Host a special shopping event that caters to selling marked down items. Add special incentives to purchases made with multiple items. For example, you could have 40% off the first item and 50% off each additional item purchased. Consider adding other incentives to sweeten the deal, as well. Buy one get one free. Gift with purchase. You get the idea.

4. Some small business owners are willing to trade their inventory with other stores. You want to find like minded stores that may be interested in your product to do this. Consider how this may work for your inventory to help control costs and keep product moving in and out of your store.

Don’t be afraid to mark your product down because in doing so, you may take a loss. The bigger loss you are at risk for is not moving any inventory at all and ultimately having to close your doors. Be realistic with yourself as to what is the best scenario for your store, ultimately allowing you to bring in products that sell.

Your New Customer

Customers are not shopping like they use to, therefore buyers of stores should not be buying like they use. What was bought in the past may have been bought for your old customer. Your customer, however, in most cases has evolved into a new customer with new shopping habits. He or she can literally be the same person, but their shopping habits are most likely different. Take this into consideration when making any future purchases, as well as when considering markdowns for your current inventory. To help you understand this better, consider how you may have changed your own shopping habits. Ask yourself what has changed, what has not, and why. Consider this, as well, when thinking of your own customer base.

One way of really getting to know your new customer is to talk to them. You can do this by simply asking your customer what their thoughts are on your product assortment, competition, and how you can better serve them. In addition, you can more formally put these questions into a questionnaire, offering your customers an anonymous way of sharing their thoughts on your store. While I don’t encourage overdosing on email blasts, this is a great excuse to send one out if you have a list of emails to communicate with your customers with. You may also leave the questionnaires by the cash wrap with a sealed box for them to put their comments into. The catch here is that if you do this, you need to be prepared for what you hear. It’s not always easy to listen to constructive feedback, but often it’s exactly what you need to hear to get the ball rolling into a better direction.

At the end of the day, be aware of the strengths and weaknesses of your inventory and who your new customer is. By considering the influence in which they have with each other, you should be able to better control your inventory and ultimately increase your sales. Despite a tough economy, people are still shopping – simply not as much. It’s what they buy, why they buy, and where they buy that will make a difference in whether or not you survive this challenging economy. Be one of the survivors and make the changes you need to in order to stay alive.