Your inventory is your store’s largest asset so knowing when it’s time to move out old merchandise and make room for the new is very important. No seller likes to markdown full-price products. But the reality is, your inventory only has a 60-90 day shelf-life, meaning if you don’t turn your inventory in that 3 month period, it’s probably costing you money. We have created a timeline that you should consider following for turning inventory.

Week 1: Intake inventory to stock, pricing, put out new inventory

Week 2 – Week 8: Full-price sales and promotions

Week 9 – Week 12: Start markdowns and clear room for new inventory

To make the most of your markdowns, you should be aware of some of the best practices for discounting your inventory: Markdown in season: If products aren’t selling at full-price and the season is dwindling down, it’s time to start marking down products. Customers will feel like they are really getting a deal on something they can use right away, rather than something they won’t be able to use until next year. And when customers buy products, even marked down products, they put more cash back in your pocket! Markdown at least 20%: Don’t waste time gradually increasing the markdown percentage. If you do that, you may end up hanging on to the item too long and miss out on a chance for a sale. Instead, start at 20% and move items out more quickly. Customers will be more likely to jump on items that are marked down at a higher rate. Have a clearance section: Having a section in the back of your store dedicated to clearance items will help your customers. If they are looking for a good deal, they will know exactly where to go. By locating the clearance section in the back of the store, customers will have to walk by all of your new merchandise. You could also consider having price point tables for the inventory that still isn’t selling in the clearance section. Mark everything as “x” dollars to make the purchasing decision easier for your customers, and they’ll feel like they’re getting a good deal! Markdowns are an essential part of maintaining healthy cash flow. Smart retailers understand this and make the most of their marked down inventory. To learn about the other best practices for markdowns, check out this guide! As we are all anxiously awaiting warm, spring weather, you have probably started to think about how you are going to turn over your winter inventory to make room for all of your spring stuff that is coming in! If it hasn’t really crossed your mind yet, don’t fret! Winter is obviously still here, therefore people are still interested in buying cold weather-related inventory, or at least waiting for it to go on sale. Obviously, markdowns are a dreaded, yet essential part of being a smart retailer. Knowing how and when to discount your inventory is key. While every store is different and shelf-life varies between products, when a season draws to an end, you need to get your old inventory out as soon as possible. It’s not too early to start transitioning your worst sellers to the clearance section. If they aren’t performing well amongst your other inventory, you should put it in the clearance section so you don’t risk being stuck with it at the end of the season. As spring gets closer, continue to mark down winter clothes. According to markdown best practices, you should mark down your merchandise starting at 20%. Don’t miss out on the opportunity to make a sale. Customers are more willing to make the investment when they feel like they are getting a good deal. Consider making bigger jumps to the markdown percentage that can move the item quicker and still make you money. Whatever you do, don’t hold onto old inventory. It’s not only not making you money, but it’s losing you money because it is taking up space where new inventory could be placed and sold! Markdowns help increase cash flow, so it’s a perfect way to get out with the old and in with the new. To learn about other ways to increase your cash flow, check out our free guide. Now that the holidays are a month out and foot traffic may have slowed down a bit, it’s time to reflect on your holiday sales. Have you had a chance to compare them to last year? If so, were they better or worse? If you haven’t, it’s time to gut check all of the efforts you put into prepping for the holiday season and see what worked and what could use a little refining. Review the numbers First things first, make sure you pull sales numbers for this year and last year’s sales. Take the time to sift through the numbers and make sure your sales were as good, if not better than last year. If they aren’t, you need to sit down and consider what changed over the course of the year. Total Sales Of course it’s important to see what your total sales are for the holiday season. These numbers are easy to pull and give you a quick starting point for comparison. You can break this number down by the whole sales period, month, or day. Then you can start to target what days and months were your most successful. Top Products Sold Chances are you already have a pretty good idea on what products are probably selling the best in your store. But with higher sales during holiday months, it’s always worth looking into which products are making you the most money. After you’ve identified your top sellers, reflect on a few things. Are these products you already have in your buying rotation? If they’re not in your buying rotation (and not seasonal items), it may be worth considering adding them due to the high demand. Review your marketing Did you run any marketing campaigns leading up to the holidays? If so, did you see more customers in your store as a result? It’s important to take the time to review your marketing campaigns and pinpoint programs that worked and programs that gave you little return. Coupons Did you find most purchases were made with coupons? Coupons are a great way to get customers into your store, but if you give too much of a discount or give them out too often, you risk losing money. If customers expect a coupon to come out every 30 days, they may wait to visit your store until they know they can get a discount. Consider using coupons as a ‘thank you’ gift to loyal customers or reward programs that give customers a percentage off after they’ve spent a certain amount in your store. Email Campaigns Make sure you’re tracking the success of your email campaigns. If you’re using a company to send out your emails, you should be able to review certain statistics. Check open rate, click-through rate, and subscriptions. If your numbers are low, you might want to consider reviewing your audience and content to ensure you’re sending messaging that will increase your engagement so your offers reach more of your customers. As a retailer, it’s important to reflect on your year-over-year sales to ensure that you’re meeting the expectations you forecasted. But reflecting on a usually larger-than-normal sales period can help you identify areas where you’re excelling and areas that could use improvement. If you spend the time reviewing your sales, you have a better chance at turning your insights into profit sooner rather than later! So you’re an owner of or a buyer for a store and you need to make purchase decisions on new inventory, but how do you know where to start? You’ll need to ask your vendors some questions in order to create an effective selling plan. We participated in a round table discussion at The Running Event which addressed some of these questions,  so we’re giving the answers to you!

Here is what you should be asking your vendors:

  1. “What should I be buying?” Your vendors should have a lot of insight into what is popular, what is selling well, and hot new items. Let them guide your buying decisions so they can help set you up for success.
  2. “What if I want to try something new?” If you want to try a new product, ask them for a ‘starter pack’ of their top five products in that category. That way you can test out your new idea on a smaller scale, avoiding the risk of making a big mistake.
  3. “Who else carries it?” You should know your market and what other people are doing. Will the item be unique to your store, or are your competitors selling it too? Find out what worked, and what didn’t. If you find out that a certain product is doing well in one of your competitor’s stores, then you should carry it in your store as well.
You can also make purchasing decisions by analyzing your inventory performance by running a Best Sellers Report and a Worst Sellers Report. Furthermore, you could do some research to find out how consumers are reviewing different products. If you see that one of the items you were planning on ordering is getting terrible reviews, save yourself some money and avoid bringing that product into your store. Finally, once you have the product in your store, remember that the placement of items matters. Make sure you’re strategic about where your items are located in your store. You may even consider heat-mapping to do things such as putting low-performing inventory in hot selling spots in your store. Good luck! To check out some other resources from The Running Event, click here.   Taking physical inventory is probably something that you dread each season. That’s why we are here to help make the process easier! While it is a daunting and tedious task, it is an important thing to do since there are some things that the software just can’t account for. Having an accurate count of your inventory allows you to run your business in the most effective and profitable way possible. Inventory is your store’s number one asset and expense. Count Inventory Regularly You should be counting your inventory regularly so you always know if the data in your system is consistent with your count. Unfortunately, theft happens, and that is something that your inventory management system cannot account for. Some ways you can get started on this process are to: Make It Manageable Thinking about counting all of your inventory at once is definitely an overwhelming task, especially since we recommend doing it quarterly or biannually. You should consider breaking up your store by product category and taking inventory in small segments. It is also important that you stay focused during this process to prevent mistakes. Some tips while performing physical inventory are to: Organize Your Store Preparing your store for physical inventory will decrease the time it takes to complete the process. This will allow you to quickly go through and account for all of your merchandise. The more organized your store is on a regular basis, the less painful this process will be. To the best of your ability you should: You can mitigate the effects of missing inventory by regularly performing physical count of the merchandise in your store. It is always good to have an accurate count of your inventory and to be fully aware of the status of your merchandise. Click here to check out our full guide on the need for physical inventory. Every year around this time comes a process that employers and employees hate alike. You’ve guessed it: it’s time to take a physical inventory. Why do retailers and their employees dislike this process so much? The answer is… a multitude of different reasons. First, this traditionally arduous process usually takes hours upon hours to complete. Organizing, separating, scanning, counting, reconciling, searching… the process goes on and on. And depending on the size of your store and the amount of merchandise you carry, it can take much longer than the average retailer. It’s a fact, nobody likes to devote tons of time to this endeavor. In addition, it’s an extra day’s worth of wages that have to be paid out to whomever you have trusted to help you keep your inventory count accurate. If you didn’t ask some trusted employees to help you count your merchandise, then you are probably doing it yourself. Unless you hired an outside company to count for you, and that can be a scary proposition! And then there is the fact that after you have everything counted and reconciled you’re left wondering why these inventory counts are off. Are people stealing from you? Is there something wrong with the receiving process? Where are the errors coming from? How can I prevent this from happening again? Luckily, RICS can give you the tools for reinventing the physical inventory process and alleviating a lot of the pains associated with counting your merchandise. Unlike many POS and inventory management systems, RICS gives you the ability to conduct partial physical inventories. You can conduct inventories based on Vendor, Class, Department, Color, specific item number, or even a custom entry you can create. By breaking your inventory down into smaller groups of merchandise, you can transform the process and mindset of conducting a physical inventory as well as see improved results. By focusing in one class of merchandise at a time, you have trimmed your 8+ hour process into small sessions of 30-60 minutes. You can start doing a different class or category every month. Your employees will thank you for asking them to stay one extra hour extra versus eight extra hours! This will help the costs associated with paying extra wages are spread out over the entire year, rather than once or twice a year. The mindset is changed from dreading a once a year process to a new norm of a small monthly duty. Accuracy will improve as you are on a cycle that involves counting everything more than once a year, rather than depending on your accuracy just one time a year. Transform this process from something that is a cost of doing business to a way to put more money in your pocket. Improve your inventory accuracy, make better data driven decisions, and start fine-tuning retailing methods to bring you more success! For more information on physical inventory and tips for making it an easier process, click here. Are you a multi-store business owner looking for some tips on managing all of your stores? We are here to help! Technology is a key player in managing your stores, so it is essential that you are equipped with the right tools that will help your business grow. Having an inventory management system that tracks all of your stores’ inventory and ROI in real time will give you a huge advantage. Examining your stores as a whole is only possible with technology that allows you to access all of your stores’ data at once. If your retail technology is cloud-based, you can analyze your stores’ data anytime, compare data between stores easily, and update data from anywhere to all stores instantly. Ensuring that you have standardized procedures in place will help your stores operate at optimal levels. You can start by organizing your stores similarly, both on the sales floor and in the stock room. Being able to transfer your inventory between stores is a huge benefit to being a multi-store owner. Instead of having to reorder products, you can look to your other stores and exhaust your own resources first. If you have an inventory management software that you can use across all of your stores, you should make sure that you are analyzing inventory performance at least once a month. By keeping an eye on this, you will have a good idea of what inventory sells best at each store. This will be very helpful when it comes time to buy for your stores. Being able to pull reports from each store and map inventory sales across all of your stores helps forecast demand. Another important aspect of owning multiple stores is keeping in close contact with each manager. You should check-in on your stores yourself at least once a month and spend time evaluating processes and procedures. This will ensure that your stores are standardized and will help you get a better idea of how each store is functioning. Owning multiple stores can be very overwhelming at times. Be sure to check out our guide to multi-store management for more tips. Do you know how your inventory is really doing? Do you have enough stock on hand? What are your top-selling items? If you are unable to answer these questions, it might be time to consider rethinking how you manage your inventory. Inventory management allows you to run your business in the most effective and profitable way. Your data is what offers you insight into how your inventory is performing. These best practices will help you to get the most of your data when it comes to managing your inventory. First of all, you should be tracking your inventory. Your data is what gives you the information about how your products are doing, and therefore will help you make informed buying decisions in the future. Tracking your inventory will give you the data necessary for these insights and help you to always know what you have on hand. Secondly, you need to plan before you buy your inventory and use your data to see what you should be ordering. You shouldn’t simply reorder the same quantities, but instead see which products are the best and worst sellers and order accordingly. You should also use the data to your advantage when pricing merchandise. Look at previous seasons to guide your pricing decisions. Knowing how your merchandise has performed in past years will help you accurately buy and price for the current season. Third, you should be checking data and reports frequently. This will give you a good idea of how your inventory is performing overall. The more often you access these numbers, the quicker you’ll see red flags that need your immediate attention. You also will be more reactive to inventory needs and can make adjustments on the fly. Finally, make sure you focus on demand forecasting and study past sales to predict future patterns for inventory. By looking back at previous seasons from past years, you will be able to more accurately buy inventory for the future. All of these tips will help you use your data to make educated buying decisions that will help you be a more profitable retailer. If you found this helpful, download our best practices guide to learn more. Inventory is what makes your business run because it’s what your keeps your customers coming back. How do you know if you are making the right decisions with your inventory? Here are 4 of the biggest mistakes that retailers make in regards to their inventory: Too Much Inventory: Yes, it is possible to have too much inventory. If you have too much inventory on-hand, it can tie up cash flow. How can you determine if you have too much inventory? Data! Knowing your sales performance of certain styles, vendors, and classes will help make sure you have the right quantity. Not Enough Inventory: Again, use your data! You want to make sure that your inventory is correct and that you are evaluating the sales performance on all of your items to make sure that your shelves are stocked with the right product that your customers want to buy. Pricing items correctly: This again comes down to data. Being able to see the first and last date of receiving of your inventory and the age of the product will help determine the markdown strategy to put in place to either sell more of an item or to get rid of an item to help free up cash flow. Making buying decision on the fly: This happens all the time – you think you know your business and you buy what you like or what your sales representative says will sell. Data, once again, is your friend. Seeing the Turns, ROI, and Open-to-Buy will help you determine what is profitable, what sells, and how much money you really have to purchase those items. Having the right tools to help evaluate these parts of your business are very important for making the right inventory decisions. RICS Software can help make these important business decisions with our robust reporting options. Click here to learn how. So you’ve been in business for a couple of years and your store is doing well, but is it time for you to grow your business? The majority of small businesses believe that they can double their sales within five years and do so with a relatively small number of issues, according to a survey from the National Federation of Independent Businesses. Are you ready to grow your business? Here’s what you can do: Open another location: Just be sure to make sure that you’ve had steady growth over the past few years and that you wouldn’t be competing against yourself. Form an alliance: Partner up with other stores that have a similar customer base as you so you can help each other make more money. Diversify: Get creative and bring your store to the next level by offering a new or unique product or feature. For example, if you’re a running store, offer some community exercise classes. Target other markets: Are there other markets that might benefit from your goods or services? Could you introduce something new in your store to cater to a different market? Create online presence: If you don’t already have a website, it is time to create one. Giving your customers an additional space to shop at your store can only help, not hurt, your business. Use data to make smarter decisions: Identify the numbers and data that matter to you and use those. You never know what information you have today that you can use to make decisions in the future. See what your competitors are doing: Your competitors must be doing something right to succeed, so figure out what it is, and do it better! Click here to learn how RICS Software can help you grow your business! Markdowns. No store wants them, but every store has them. Many stores would consider this the dirty little word of the retail industry. But in reality, markdowns are a HEALTHY part of doing business. The truth is, cash flow is dependent on an effective markdown strategy and all good retailers are in the business of marking down old, low-selling inventory to make room for new inventory that will sell. But how do you do it? Read on for some markdown best practices!

Identify the shelf life of products.              

Before you can effectively markdown products, you need to understand the shelf life of them. Is it 60 days? Is it 90? You need to understand a realistic life of your products in order to identify how long to keep a product before moving it to clearance. Review your past year’s data, look at your top and middle selling products. Decipher a drop-off date that takes these best sellers from profitable to not.

Set up a markdown schedule for your store.

Once you understand how long you should keep a product, you can start to automate the markdown process. Set up a schedule in RICS to automatically markdown items that have hit their shelf life date. The most important part of the schedule is sticking to it. Once you identify how to move products that have sat for too long, don’t change your mind and try to hold on to them. That will only end up costing you money rather than making you money!

Create a pricing markdown strategy.

Once you know when you’re going to markdown your products, you need to decide by how much. Avoid keeping items for even longer by doing a slight markdown. If you markdown products by 40% immediately, it will increase the likelihood of quick purchase, while still helping you make some money on it. As a retailer, you know your products and customers best. In order to implement an effective markdown strategy, you have to keep both of those things in mind. Identify the process that works best for you! But remember that moving out items that aren’t selling can help you make room for the new inventory that will make you money. To learn more about how you can increase your cash flow quickly, download our free guide Cash Flow: How to Make More Now today! As a small business owner, you know the importance of tracking and analyzing your data. But in order to make the quick, real-time business decisions, you have to be looking at your data on a regular basis and adapting to what it’s telling you. At times, it can be hard to know which data points can help you make the best decisions for your business. Starting with these three data points can help you get a grip on analyzing your data and start putting it to work! High-selling items that are low in stock. Knowing what items are your best performers and when they are most likely to sell can change the way you do business. Keep your eye on this type of item to be sure you’re restocking your item at the right time. You don’t want to find yourself in an item’s peak selling time without the right amount of stock on hand for your customers. Low-selling items that have been in stock too long. Inventory that has been on the shelf too long is a problem for your bottom line. Make sure you are identifying which items aren’t selling well and marking them down to clear space for inventory your customers actually want. Items that have recently taken off in sales. Items that were top sellers last month may not strike a chord with customers this month. Whether it’s seasonality or a new trend, you always want to be in the know about which items are taking the top selling spots in your stores. This way you can quickly restock these items, rather than putting your money towards inventory that has stopped selling. Interested in learning more about using technology to grow your business? Check out our How to Grow Your Business with Technology guide.

The Importance of Inventory Management

  56. That is the number of shoes in my closet. Yep, 56 pairs of heels, boots, sandals, and wedges. This number does not include athletic shoes, flip flops, and the random pair of ice skates on the top shelf. I know, I know. I am a shoe girl – I have always been a shoe girl. I have all of my shoes organized by color and type so I can quickly find whatever I need and I am always evaluating the shoes I have on hand. I do a physical check to see which ones are worn and need retired and which ones are out of style for the current season. This also allows me to understand what I have and what I “need” when I am out shopping – nothing is worse than having two pairs of very similar, open-toed, black lace booties when I could have gone for the pink, patent leather stilettos! My system works for me, but I am only managing 56 pairs of shoes and I don’t make or lose money based on what is in my closet. I cannot even begin to imagine what it would be like to be a retailer managing more inventory than that. But many of you out there can. You manage hundreds and thousands of SKUs that come in and out of your store on a regular basis. You have to manage the inventory coming in from suppliers, what may be transferred to another store or sold online, and what goes out of your store in sales. You need to work hard to manage your inventory so you can make money to maintain and grow your business. On average, almost 25% of your inventory costs could be eliminated or reduced by rethinking your inventory management strategy. That means more money to invest in high performing inventory and more money to the bottom line. RICS’ exclusive e-book can give you many useful tips and strategies to help you: Click here to access our e-book and learn more about managing your inventory more efficiently. In the meantime, I have shoes to to assess! [vc_row][vc_column][vc_column_text]How much time do you spend walking around your shop counting items that need to be replaced? Even if you don’t typically sell many of the same items over and over again, there are usually some ancillary items that you carry on a consistent basis. What if I told you that there was a way you could drop that clipboard and gain back all the time you spend counting those “fill-in” items? What if that whole process of ordering replacement inventory from multiple different vendors could be facilitated with the click of one button?

Welcome to the world of model stocks!

Not only will you find that utilizing model stocks is a significant time saver, you’ll find that it will ensure that you don’t miss one of the items that should be on your radar. RICS allows you to tackle the issue of deciding on your model stocks orders from a couple of different perspectives. First, after running the appropriate ‘Best Sellers’ or ‘Sales Analysis’ reports, you can decide for yourself which are the appropriate items to be put on model. Then it becomes as simple as deciding on the minimums and maximums you want to carry for each item, even down to the particular size. In RICS, this is easy to facilitate; you only need a number of items put into a grid: grid analysis After creating your models, you can allow RICS to generate an Automatic Purchase Order based on either those minimums and maximums in the grid that you designated as the models or sales performance. If you choose the sales performance route, you can use either ‘Sell-Thru’ percentage or replace just the quantity sold. Regardless, these simple steps can cut back the time spent on the replenishment ordering process by 90%. And don’t worry retailers, just because it’s an ‘Automatic Purchase Order’, doesn’t mean it will be automatically ordered. You’ll still be holding the reins of your wallet.[/vc_column_text][vc_row_inner][vc_column_inner width=”1/2″][vc_column_text] [/vc_column_text][/vc_column_inner][vc_column_inner width=”1/2″][vc_column_text]

OPEN-TO-BUY: WHERE BETTER INVENTORY MANAGEMENT BEGINS

Watch our free webinar featuring Paul Erickson (SVP of Client Services at RMSA) about open-to-buy, a financial strategy that helps retailers focus on accurate forecasting and selling strategies to help increase profits.
WATCH THE WEBINAR →[/vc_column_text][/vc_column_inner][/vc_row_inner][/vc_column][/vc_row]

The importance of inventory management

A couple of weeks ago, we visited a couple of our clients in central Michigan to inquire about their experiences with RICS. While there, we met with Vickey Wegener, owner of two Educational Outfitter stores in central Michigan. One retail buzzword that I have heard over and over again is “Inventory Management.” I have learned its value and importance in the retail world and that RICS can and will accurately manage inventory. After meeting with Vickey, I learned firsthand how RICS plays a crucial role with her stores’ inventory management. One of the biggest takeaways from this client visit was how Vickey now has better control over her inventory. After switching to RICS, she found that doing a physical inventory is much simpler than it was before. She also explains how she knows and trusts that the inventory is accurate when she is finished: “If the computer shows that we have it, then I know we have it.” Because of the inventory management and reporting capabilities within RICS, Vickey now has better control over what is coming in and out of her inventory. In fact, she has actually decreased her spend on inventory by 40% because she is able to have a better handle on her business. Vickey shared with us that some retailers claim that they don’t have time to monitor their physical inventory, especially during their busiest seasons, but she tells them “you don’t have the time NOT to do that.” Although keeping track of inventory can be tedious and time consuming, the financial benefits make it worth it. You can find the full case study here.

ed outed out clothes

Learn more about why inventory management matters.