Thursday, March 10, 2011

Turn your inventory into Gold

Our retail tip of the day today focuses on inventory. It is usually the largest expense that any small business has and yet many retailers do not plan a through purchasing process to maximize the usage of dollars associated with inventory. To maximize your inventory turnover and reduce unnecessary expense on inventory, you must have a plan.

There are many options for you to choose from. If you're a long term retailer, perhaps you've got an inventory purchase system that works for you. Wonderful. Make sure you keep updating your system and checking your stores' overall performance against the key industry benchmarks that are available. The systems out there today keep improving overall performance of inventory- and you should be pushing your store to as well.

For those of you who are new to retail, or for those that haven't done any purchase planning to date,  why not think about having a retail professional help you to set up an OTB plan for your business that will deliver proven results. He/She can help you find the best way to maximize your inventory you do have and not spend too much of your hard earned money on wasted inventory! If you find the right person, their professional advice will pay off almost immediately.

Specialists in inventory planning and open to buy management have had years of experience and can understand even the most subtle nuances of your business. They can translate even the slightest trend data and give you sound recommendations on how to maximize the opportunity at the same time cautioning your progress so you don't spend too much. A professionally managed otb can also help to:

Increase Sales - consistently maximize all key inventory contributors  

Drive Profits - minimize inventory investment; increase inventory turnover  

Enhance Overall Product Mark Up - utilize key retail industry benchmarks to improve mark up and gross margin targets

Improve Cash Flow – optimize inventory investment freeing cash flow for debt reduction  

Improve Productivity Of Store Management – shift time spent on inventory management to building long term strategic sales and marketing efforts  

Create A Proactive Emphasis On Inventory – interpret selling data for future purchase planning decesions

Gain Access To An Expert - an experienced, independent and objective perspective resulting in candid recommendations and action plans  

Should you hire a professional for your otb services, some of the following outcomes are possible:

Sales Growth Typical sales improvements are between 2-5% annually – based on a $500,000 business, that’s an additional $ 25,000 in sales in one year!  

Gross Margin And Profit Enhancement Typical gross margin improvement ranges between 0.5% and 1.0% within the first year - based on a $500,000 business this improvement alone would cover the expenses of running the otb program.    

Inventory Investment Reductions Professional OTB management typically leads to inventory reductions of 8% -13% of average stock while simultaneously increasing sales - as the owner of the business, this adds additional money back into your pocket - almost immediately.

Whatever you decide, your own system, or hired professional, make sure you set plans and goals for your inventory performance. Every business can and should continually look to improve it's turnover, sales and profit performance.

Want to talk to a CBCG team member about OTB services?  Contact us today to learn more.


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