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Stock Turns - The Magic Number
Thursday, November 15, 2018, by Chris Boydell, comments 0

Stock Turns are defined as the number of times an entire display of product sells in a year. So if one sells 300 pieces in a year (or 25 per month) from a 100 piece display, you are turning that stock 3 times.

At, On the Nose, there is one number that we like to focus on. It’s not wholesale sales - without corresponding retail sales this is just a transfer of stock from our warehouse to a customer's display stand. It is not a good measure of business.

The number we like to focus on is Stock Turns. For a couple of reasons:

1. It’s a number that we can both feel good about. If stock turns are high, both parties are going to be happy. The customer is making good retail sales and the wholesale sales will follow. If it’s not as high as both parties would like, then we should both be motivated to do something about it. Addressing this numbers suits both parties.

2. We consider display space in store to be a privilege, not a right (even where there is a signed agreement). We consider it our responsibility when occupying space in your store to maximise the sales from the display. To this end,
- we don’t want the display crowded with items which are under-represented in the sales;
- we don’t want the display to run out of best selling categories.
- we don’t want a store hanging on to styles which are clearly not selling - we will swap them for a style which will.

In order to help the Stock Turn number get as high as it can, we employ Dynamic Merchandising using our proprietary stock management system.

High stock holding is the enemy of good stock turns.

High Stock holding means the store is over stocked in something. It won’t be the best sellers, so it must be the slower sellers. The next unmanaged overstocking order cycle produces the same result. Now slow sellers are doubled. Slow selling stock then starts to dominate the stock holding and starts to dominate the stand. Sales dry up and people wonder why.

Low stock holding is also the enemy of good stock turns.

Remember, the display size is a measure of the variety that is needed to offer variety to customers at all times - at a minimum [See Why So Much Choice] If less is needed, a smaller display stand is warranted. In most cases, in a perfect world each store would be offering more (see Why So Much Choice) but there is a balance between foot traffic, potential sales and available space. Having made the decision on the variety to be offered, don’t cheat on customers. If the display is under-stocked it is robbing variety. More often than not, what is now missing from the display are the best sellers (because these sold first!).

Half full stands of eyewear do not turn over quickly.

Ideal Stock Level

Ideal stock holding should be enough reserve stock to maintain a full variety offering until the next order arrives. If it's a monthly ordering cycle then one months sales should be maintained in backup. If it’s 6 weekly, then it's a month and a half.

Reading Glasses sales happen everyday. There is no season. They will be proportional to foot traffic through your store.

If reading glasses sales slow down unrelated to foot traffic the stand probably has the wrong mix or has sold out of best selling categories.

Some of the most common situations that we have encountered are:
- none of the most popular magnification left (lose up to 30% of sales)
- no men's styles (lose anywhere between 30% and 70% of sales)
- wrong price range (lose anywhere between 30% and 70% of sales)

With proper monitoring, these problems can be avoided and your stock turn number can grow. Nothing would make us happier.

 


 

 

 


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  1. Stock Turns - The Magic Number Chris Boydell 15-Nov-2018
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