Hardware Retailing

OCT 2018

Hardware Retailing magazine is the pre-eminent how-to management magazine for small business owners and managers in the home improvement retailing industry.

Issue link: http://www.hardwareretailingarchive.com/i/1030469

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Page 90 of 102

rather than being a graveyard that keeps collecting dead products. In addition to reading this article, make sure those in a leadership position in your business have an understanding of the importance of the entire inventory management process. The North American Retail Hardware Association (NRHA) recently developed a brand new course in Basic Inventory Management. This online course offers foundational information about inventory management and some best practices to follow. Having this foundational understanding will be useful when tackling slow-moving inventory. For more information on the course, turn to Page 14. Don't Be Complacent Often the first barrier to purging unproductive inventory is finding the time to do it. It's possible that while you know clearing slow-movers is important, but you may not think it's urgent. With everything else there is to do around the store, it's easy enough to put off hunting down those items that haven't sold in a while. Hollingsworth understands. "It's not like the store isn't going to function because you haven't worked your dead inventory," she says. "But your inventory is your biggest asset. There's a lot of money attached to it, so it needs to be managed appropriately." Poorly managed inventory will cause several problems for a business. Every item needs to earn its place. Low product turnover will impact your profitability. According to NRHA's 2018 Cost of Doing Business Study (CODB), high-profit hardware stores have an inventory turnover of 2.7, a gross margin return on inventory of 194.3 percent and inventory per square foot of $52. If your numbers lag behind those, one of the reasons might be that too many slow-moving products are dragging down your profits. (For more information on this year's study, see Page 16.) The customer experience will also suffer if dead items stay on the salesfloor too long. "Customers are shopping everywhere. They know the latest and greatest of what's out there, and they expect to see it in our store," Hollingsworth says. "But we can't just add, add, add and never take away. We have to deal with dead inventory because we need to make room for what's new." Competing with online retailers includes offering an exciting shopping experience that engages the customer, which means having new products and a store that is easy to shop. In addition to working through your dead inventory, you need to be eliminating discontinued products and working with your suppliers to keep your product lines up to date. A store cluttered with outdated merchandise will quickly lose its appeal to shoppers. Each of the three Griffin Ace Hardware stores will complete as many as 12 category resets throughout the course of the year. When that happens, there's the possibility of creating redundancies that will quickly take up shelf space and create confusion for customers. "Instead, our goal is to make the shopping experience easy," Hollingsworth says. By regularly reviewing their product mix, they clear out duplicate items and keep the product mix simple. "We want to have the main brand coupled with a less expensive brand so shoppers have some options but not too many. Otherwise, we just frustrate customers," she says. Identify Slow-Movers An occasional attempt at dealing with dead inventory is likely to result in frustration. The inventory list may be so long it feels it would take too much time to tackle. Rather, the best HARDWARE RETAILING | October 2018 86 Department specialists at each Griffin Ace Hardware store designate slow-moving items to send to clearance.

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