The fact that nowadays people are buying less, you certainly have heard. Retailers' sales were lower than last year, while last year - less than two years ago. Traders have an alibi and an excuse - "reducing consumption".
Although traders are organizing mass clearance sales, which are the result of trade surpluses, but at the same time users sees the empty shelves or complain of poor range, which illustrates the trade deficit?
The easiest way to blame customers who are looking for some kind of niche unique products. But very often I come back home without any purchases after visiting the shop. Look at the shelves of bread and refrigerator with meat in the evening, when you will visit your favorite grocery store after work. You'll likely not to see fresh bread and fresh meat products. It is very rarely successful for me.
Very simple business...
Let's see what determines the profits of retailers? This determines by the three cornerstones of the following subjects:
- how many clients have come,
- how many clients who came to buy,
- what customers are buying.
If a company wants to attract clients, it must necessarily have a SIGNIFICANT competitive advantage. And what is the competitive advantage? To create a significant competitive advantage, it is necessary to meet the needs of the client as no one can. Can a price be a competitive advantage? How long must compete to copy the price?
What are the needs of retail customers?
The reasonable price is one of the customers' needs (especially now, during the crisis). But we, as buyers, have become accustomed to the game of retailers' discounts, when the prices have not changed. Rare retailer can actually offer low price and be profitable. For this should be another solutions.
Good range of products and their availability on the shelves is another important indicator of consumer demand. If the customer does not find the required product (SKU - Stock Keeping Unit), he had bad impression of the proposed range of goods and possessions. The size of the shelves is usual constrain for the shop for a better availability of goods. Very often a large part of the shelves (constraint) is used for those goods that were ordered based on too optimistic forecasts. If you don't believe me, go to electronics, footwear and clothing stores. You'll see that the shelves are full, but most of the goods are from the last season. Nevertheless, the presence of products in the market that are not in high demand, did not create the impression the availability of goods.
How to increase sales while ensuring the necessary resources or goods in the right place at the right time, while reducing inventory and without increasing operating costs?
The motivation is very simple in the retail business: you have to have something that people buy, and not have what they do not buy. Nevertheless, we see that often everything is in a different way: as luck we don't have enough of those goods which are in demand, and always a lot of those products that consumers don't buy.
Try to imagine trader's life. We are seeking a profit in every business. For this we need to ensure sales. And for this we need to have the goods - stock. The more the better? No - only that business will be profitable, which is not only able to sell much, but at the same time reduce costs.
What we traditionally do, if we need to reduce costs? Yes, we are trying to squeeze the supplier to get the greatest discount. As a result, we have to buy larger batches. But we own an interest in buying larger batches, so we could save in transport costs. We also try to adjust the sales forecast - but about it later.
Traditional cost-cutting actions really pushes us even deeper into the corner - after all, the most significant costs are large stock: store goods (as well as goods bought with a discount) costs money, goods gets spoiled or morally are getting older and eventually begins lack of funds for new products purchase. This is another reason why the range of products are decreasing.
Would you like to find out how your company could: dramatically reduce the disadvantages of marketable goods, thereby reducing inventory and improving their negotiable; reduce the loss of moral and physical outdated goods, don't lose sales and release of the working funds?
Let's meet and talk, perhaps together we can achieve results faster?
During the meeting Nerius Jasinavičius, the head of the business consulting company "TOC Sprendimai" will present how to improve your inventory turns and return on invested capital to increase company sales and the release of working capital funds.
