Marketing Tip of the Week – Managing Inventory

Your store is supplied with lots of inventory. Are you managing it properly to improve cash flow? Inventory has the tendency to just sit there, especially if it’s not in season or if you aren’t efficiently getting it out to the floor for customers to see. This week’s marketing tip will focus on how you can manage inventory properly while gaining profit.

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  Marketing Tip
  Have you heard of the 80/20 rule? It states that 80% of your sales come from 20% of your inventory. The items that are on trend drive your sales. The issue with this rule is the 80% that’s only generating 20% of your sales. How can you change this? Do you notice that you steadily add products to your previous inventory, which adds to SKU counts and inventory levels, without sales. This can leave your customers with way too much variety that they may become overwhelmed. To resolve this issue, stay focused to your mission for your customers and store. You can’t be everything to all your customers and more. Pick your target market and stick with it.
• Always keep your cash flow in mind, not your sales. Do you think if you buy more you’ll sell more? That’s not the case at all. You have no way of predicting what will sell and what won’t. Think of if this way. You bought enough inventory to never run out during this current season. Then what do you do after the seasons over after you’ve paid your invoice and sold the last of what you could through sales? You won’t end up making much or any profit at all. Again, stay focused. Only purchase what needs to be and you can skip out on last season’s inventory and markdowns.
• Don’t let your inventory go dead. All products have a certain lifestyle. So, if you end up with leftover product at the end of the season, don’t forget to make markdowns. Don’t put it off, otherwise it will just build up. Make sure to have a markdown scheduling plan in place to avoid this pitfall.

Find the tips that work best for your store. What can you improve on to make sure you are managing your inventory properly?

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