ASK THE EXPERT
CHARLES COMPTON
I
nventory management is one of the most essential
tasks in retail. It needs to be approached with a structured technique. However, many spa professionals
feel overwhelmed by the idea of putting together an
inventory plan, calculating the right volume, identifying
the best and slow sellers, among other tasks.
Charles Compton, one of this year’s Professional
Development Sessions speakers and founder of
retail consulting company Mars Solutions, breaks
down the basics of inventory management in order to
make retail easy.
1.
What are some of the key items to look into
when putting together an inventory plan?
Start with a list of the product categories that you feel you
need to carry. Then, list the categories you want to carry. You
may need to carry skin care that is used in treatments, hair or
nail products used in salon, but you may also want to carry
jewelry or candles. Put together a list of each category and try
to allocate the sales and inventory by each of these categories
based on their contribution to revenue.
2.
Often, when it comes to inventory, spa owners
struggle in determining the right volume. How
much retail inventory should a spa have?
This calculation will determine if you have too little inventory
and miss revenue opportunities or have too much and risk
aged inventory.
Standard retail metrics would be a ratio of between and
three to six months’ worth of revenue. A spa that does
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US$20,000 a month in retail sales, for instance, should have
between US$60,000 and US$120,000 in retail value of inventory (approximately US$30,000 to US$60,000 at cost).
3.
Can you offer retail inventory management
techniques that are tried-and-tested to produce
the most profitability for spas?
Develop a checkbook based on retail open-to-buy and have a
budget for each category by month. Learn to be proactive
rather than reactive about orders.
4.
When replenishing, what strategies should spa
owners keep in mind to maximize their inventory investment potential?
Identify what your top 20 selling items are and re-order them
monthly. Many buyers wait till they are out of top sellers to
re-order, and then do not order enough of them ([ideally,
stock up for] two to three month’s supply).