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Getting rid of the “Dogs”

A significant proportion of my consulting practice involves assessing Convenience stores and providing the owners with recommendations on what they need to do to grow their store’s volume and profitability.

Although often my recommendations involve making changes in fixturing, and the store layout to improve the traffic flow, up-date the store’s appearance and to make it easier for their customers to shop, inevitability one of the key recommendations involves suggesting significant changes in their assortments and to the space that they allocate to the various categories.

Whether from neglect, lack of information, or lack of interest, I am often amazed by the quality of inventory I find and the amount of space and inventory dollars that are tied up in products that don’t sell well enough to justify being carried. Some examples that come to mind:

  • A retailer that had 30% of their floor fixture space used to display grocery products that only produced 4% of their store merchandise sales.
  • A retailer who bought an existing convenience store from a long-time operator only to find that they had to throw away almost $15,000 of the merchandise that they had purchased because it was in reality un-saleable.
  • Retailers who are still trying to sell road salt in April.

Most retailers, particularly those in the seasonal or fashion business, understand that they need to markdown and get rid of merchandise that doesn’t sell or merchandise whose season is coming to an end.  For some reason, most convenience store operators seem reluctant to take markdowns and get rid of merchandise that is not selling. Although there are many reasons why you can end up with “dogs” in your assortments, (you bought too much, you got such a “great deal” that you couldn’t turn it down, the packaging is damaged, the consumer demand has changed, etc) the reality is that it doesn’t matter and you need to take action.

If you don’t take action to rid your store of merchandise that is no longer selling (the dogs) there are several serious consequences:

  • They take up space that could be used to display products or categories that will sell better and therefore they have a negative impact on your ability to generate more sales and profits from your entire store.
  • The packaging and product quality never improves with age, “dogs” affect your entire store image and they send the wrong message to your customers about the quality of all of your stock.
  • “Dogs” will prevent you from carrying the products you should have and your customers want and they will cause your customers to shop elsewhere.
  • “Dogs” tie up your inventory dollars / investment with out producing any return on your money.

There are several simple things that you can and should do to make sure that all of the products that you are carrying in your inventory are contributing to your overall sales and profits:

  • Make sure you are tracking the sales of your most important 15 -20 categories and then compare the percentage of your store sales that they contribute to the amount of space that they occupy. This exercise will identify serious imbalances in space to sales ratios of the various categories.
  • Buy yourself a price gun and date code merchandise with the month and week it was received, i.e. product received in the first week in January could be A-1, or product received in the first week in Feb could be B-2, etc. Devise your own simple code if you want, but make sure you to understand the age of your stock and how fast it’s really selling.
  • Where you have direct suppliers, ask them for your purchase history to help identify slow sellers and excess inventory.
  • Buy in small quantities and repeat as needed.
  • Pay attention to the information available to you on new or best selling products or categories you should be carrying and make space by removing existing slow sellers or reducing space in slow selling categories.

Remember to be successful in the C-Store business or any other retail business for that matter, you must stock and sell what your customers want to buy, not what you want to sell, and you cannot afford to continue to carry poor sellers. In addition, once you have identified the products in your inventory that don’t belong, take action and get rid of them quickly.

Hugh Large & Associates Inc.
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