In my previous article I raised the factor of Merchandise



Turns and their positive or negative effect on the bottom

line.

It's critical that you understand your current Merchandise

Turn rate at least at a store level and ideally how key

departments in your stores perform.

We defined annualized turn rates as

Projected annual sales/current inventory on hand at retail

Now that we have an current snap shot of inventory turns,

a few very simple practices can incrementally improve

inventory turns and not only enhance our bottom line,

but improve immediate cash flow as well:

Ask staff what specific products are turning poorly.

Their feedback is valuable, especially if you do not have

Point of Sale inventory data.

Walk the store and visually inspect all your merchandise

for shop worn or damaged merchandise.

Review all high ticket items for inventory age. The

majority of your inventory dollars may be tied up in

your higher ended products.

Review the average price point of your store. If you

have multiple locations, compare average price points

to affluence levels of the communities they reside in.

If you have stores with high price points in stores of

lower affluence levels and vice versa, consider adjusting

price points in harmony with the community's level of

affluence, disposable income and earning level.

Examine your overstock position. Segregate products

that are overstocked in your warehouse or back room area.

Review stock in comparison to market trends. It's obvious

that merchandise clearances follow seasonal timelines.

However you may find merchandise that no longer supports

other business trends. For example, licensed merchandise

of celebrities that are no longer hot or mainstream will

evolve to slow turning stock. Any fad merchandise should

be flagged for markdowns.

Once you've taken these steps to focus on the lowest

turning merchandise, get your action plan together and

improve your turns.

TAKE ACTION TODAY

1) Schedule and advertise an Inventory Clearance Event

and sell off as much marked down slow turning merchandise

over a one week period.

2) Consider adding a free slow moving product to the

purchase of a higher priced slow or fast turning product.

3) Create a clearance area in your store where customers

can return weekly to seek bargains and convert dead stock

to cash.

4) Consolidate slow moving merchandise to one store and

create a bargain area. If you own multiple locations,

this would typically be the store in your least affluent

community.

5) If you have high levels of slow turning merchandise

launch a sidewalk sale in warmer weather, and conduct it

indoors in colder seasons. You can transfer the reducing

stock of the sidewalk sale to your other locations until

it is depleted.

Inventory turns should be reviewed on a monthly basis.

In these competitive times, this is an excellent practice

that will clear up dead stock and free up cash and generate

ongoing customer traffic. Progressive retailers will need

to demand more of their merchandise turns and become more

ruthless with products that fail to turn below the store's

established average rate.