Have you got piles of stock tucked away in boxes, gathering dust in your garage or under shop tables? If so, you’re not alone. But if you’re serious about making a profit, you need to get that stock out on display where customers can see it.
It seems obvious to write, but some retailers still don’t understand this basic principle of business: stock that’s hidden away isn’t going to sell. If you’ve got stock sitting in boxes because you don’t have room to display it, it’s time to re-evaluate your purchasing decisions.
Think about it this way: every dollar you spend on stock is money you could be using to pay bills or invest in your business. So, before you buy any more stock, ask yourself:
Do I really need this stock?
Do I have room to display it?
Can I realistically sell it within a reasonable timeframe?
Is having this stock in my shop going to be valuable for the business?
If the answer to any of those questions is no, then don’t buy it.
Some retailers buy stock to impress sales reps or make their shops look busy. Others buy stock to make themselves feel better about their businesses. Some retailers buy stock because they are lonely. These are all the wrong reasons to buy stock.
There are even some sales reps who know they’re selling stock to businesses that don’t need it. Shame on them for putting their own financial gains ahead of the well-being of their customers.
If you don’t know the value of the stock in your business, it’s likely you have too much stock. A good but very basic rule of thumb or starting point of s=consideration at least is that stock should not be more than 20% of your total annual revenue from those products.
If you have boxes of stock that you haven’t opened in six months or more, you have too much stock. And if your back room, garage, or under-display table space is filled with boxes, you’ve got a big problem.
The best way to deal with an overstock of inventory is to stop buying new stock and focus on selling down what you already have. Don’t get emotional about it – just make a plan and stick to it.
If you don’t address the issue of overstocking, it will eventually overwhelm you and your business. Don’t let that happen. Take control of your inventory and watch your profits grow.
Yes, we’re a POS software company. We own and run shops, which is very rare for any of our competitors. Our daily experience in retail helps us better serve our customers in the software we make and the support we provide.