Uncover slow-selling inventory - Outdoor Marketplace

Shooting Industry, Feb, 2003 by Carolee Boyles

The first step in moving slow sellers is identifying them. That is easy in some cases, especially for those products you were convinced were going to be hot sellers. However, some poor-performing products sit on the shelf because they are overshadowed by better-selling items. They get lost in the mix. If you don't know which of your products are dogs, you're losing money every day.

"Store owners need to analyze the overall performance of their stores, starting with each individual SKU," says Robert Brill, senior retail consultant with The Damar Group, a business advisory company. "That's the only way for a retailer to maximize all his potential profit centers."

The process of analyzing your store's performance is relatively simple if you use a current point-of-sale system. First, divide your total annual sales in dollars by the total number of actual sales. You now have your average ticket amount.

Then conduct a "breaking out inventory." This will help uncover the dogs in your store and give you a clear sense of the products viability in your market.

"The process of breaking out inventory starts with departments," says Jerry Tice, a private consultant and former division manager for a major sporting goods chain. "Many times a product under performs simply because it's in the wrong department. Breaking down department sales is the only way to find your dogs and your profit centers."

For example, let's assume one section of your store is devoted to gun cleaning products. By conducting a breaking out inventory, you'll learn what the entire department is doing, plus the sales of each product.

The next step is to determine your sales per square foot, First, calculate the display space by subtracting your stockroom, office, etc., from your total square footage. Then, divide your total annual sales by the square feet used for display. This gives you the average sale per selling foot.

Using this same formula, calculate the sales performance of your various departments.

Once you do the math, look at the inventory turns per product. Inventory turns are simply how many times a product needs to be restocked during a selling cycle.

Armed with your department information and your average sale per selling foot, you can determine what is selling -- and what are dogs.