Since we own and run shops in which our Tower Systems POS software is used and in which we live the retailer experience personally, we have a perspective that is close to our customers than most POS software companies. It also gets us working with other retailers. It’s that personal contact that prompted us to share this advice and stock holding and, in particular, being over stocked, with our customers:
Stock in boxes in the back room, in a garage or under tables in the shop will not sell unless it is displayed.
While this will be obvious to most, there are some retailers who don’t get it.
If you do have stock in boxes and no room to display it, consider pausing spending to give you time to convert those purchases to cash.
The alternative is that you do nothing, and your ability to pay bills is impacted.
It’s your business. You choose when to spend and when to not spend.
Some retailers buy friendship through their purchasing. Others like to look busy with a shop bursting with stock. Others buy to feel better about themselves. Spending for any of these wrong is not helpful to the business, not helpful top you.
There are sales reps who would know they are selling stock to a business that does not need it. Shame on them. Shame on them putting their own financial rewards ahead of the evidence of an overstocked and financially stressed business. Sales people doing this are no friend of the business owner.
If you don’t know the current value of the stock in your business, it’s likely you have too much stock.
So, what’s the value of your current stock on hand?
If the value of your non circulation product (magazines and newspapers) stock right now is more than 20% of the total revenue you will make from it in a year, you probably have too much stock. The actual percentage will vary by product category.
There will be some who say the 20% figure is inaccurate and unhelpful. I have tested it in a few businesses and it is a reasonable first step guide.
So, what’s the value of your current stock on hand? Start there. Then look at your non circulation product revenue for the last year. The numbers will support what you currently see in your shop.
If you have boxes of stock that you’ve not opened for six months or more, you have too much stock. If your back room, garage and or under display table space is filled with boxes you have a problem.
The best way to address being overstocked is to stop buying and sell down what you have, and to do so without emotion.
The alternative is that you do not address the issue and the issue swamps you and your business.
It’s black and white – in your numbers and in your business.
This is one example of the practical way in which our POS software company engaged with retailers.