We asked retail experienced people in our POS software company for good retailer to retailer advice and this is the advice considered the most popular, vital and useful for local small business retailers – our target retailers.
Plenty of us here have lived the retailer experience personally. This gives us a perspective that is closer to our customers than most POS software companies. It also gets us working with other retailers.
It’s that personal experience that prompted us to share this advice about stock holding and, in particular, the significant risks of being overstocked.
The Obvious Truth We Sometimes Ignore
Let’s start with a fact that, while obvious, is too often ignored:
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 retailers who don’t get it. If you have boxes of stock you’ve not opened for six months or more, you have too much stock. If your back room, garage, and under-display space are filled with boxes, you have a problem.
Do You Know Your Number?
If you don’t know the current value of the stock in your business, it’s highly likely you have too much.
So, what’s the value of your current stock on hand? Start there.
Next, look at your non-circulation product revenue (everything except magazines and newspapers) for the last year. The numbers will support what you currently see in your shop.
As a reasonable first-step guide, I’ve tested this benchmark in a few businesses:
If the value of your non-circulation product 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.
There will be some who say the 20% figure is inaccurate and unhelpful. Of course, the actual percentage will vary by product category. But as a starting point, it is a reasonable guide to flag a potential problem.
Why We Overbuy (And Who Helps Us Do It)
Spending for the wrong reasons is not helpful to the business and not helpful to you. Some retailers buy friendship through their purchasing. Others like to look busy with a shop bursting with stock. Others buy simply to feel better about themselves.
Then, there are the sales reps who know they are selling stock to a business that does not need it.
Shame on them. Shame on them for putting their own financial rewards ahead of the evidence of an overstocked and financially stressed business. Salespeople doing this are no friend of the business owner.
The Black-and-White Solution
If you have stock in boxes and no room to display it, you must consider pausing your spending. Give yourself time to convert those purchases to cash.
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 nothing, and your ability to pay bills is impacted.
The alternative is that you do not address the issue, and the issue swamps you and your business.
It’s your business. You choose when to spend and when to not spend. The choice is black and white—in your numbers and in your business.
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While the right POS system for any retail business depends on the specific needs of the retail business, Tower Systems was built to serve Australian and New Zealand local small business specialty retailers. To see how we can help you…, request a free, no-obligation demo today.
Call 1300 662 957 in Australia or 0800 444 367 in New Zealand. Or, email sales@towersystems.com.au.



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