While retail rapidly evolves, the MacPherson’s team is taking a close look at our inventory management. This year, with losses of industry institutions, temporary vendor closures, floods of unanticipated orders, and more class kits than ever before, we see that change is happening and we need to move with it. As we adjust to these new changes, we knew it was time to re-examine how we encourage our retail partners to shop for their consumers.
Mike Mayerck, National field sales manager and 39-year-veteran of the art supply industry, took some time with me (Cassie!) to look at our philosophies and answer questions Account Managers have been hearing from retailers.
We focus our attention on a “turn and earn” style of buying. Without guaranteed foot traffic, is the “turn and earn” style of buying still a good philosophy?
Mike: “Yes, absolutely it is, more than ever. ‘Turn and earn’ is another name for ‘watching your cash flow.’ Some questions retailers can ask themselves as we move into our new reality: ‘How often do I turn my inventory? Am I turning my complete inventory multiple times a year? How about turns per month?’
Evaluate your cost of goods and divide your average with on hand inventory. This helps you make sure you have the right products at the right time. It needs to be a guiding principle. Narrow your focus down to a category of products at a time while you rebuild business. Ask yourself, ‘Do I need to add products to a strong category? Are there categories where I can perform a SKU rationalization?’
Of course, technology plays a role. Having a functional and intuitive POS system allows you to gather information quickly. Successful retailers have diversified their operations by using social media, BOPIS and their own websites to capture sales. Inventory can change and turn more quickly or more slowly, or unusual products may begin to sell without warning. It’s important to take a more active role in evaluating your true needs on a regular basis.
How do you keep the right products on hand with new demands from online selling platforms?
Mike: “It’s important to right-size your inventory through data driven rationalization. A POS system helps here as well! There are multiple resources available on the subject of inventory management, but if we go back to basics “right-sizing” your inventory is the principle of making sure you have the right products on the shelf at the right time.
Here’s how our MacPherson’s team looks at it:
- The first and second most important things you can do for your business are to make sure the “A” items, your bread and butter items, are on the shelf. Rank items based on velocity of sales. ABC. (A-Best Sellers, B-Good Sellers, C-OK sellers)
- As you rationalize, you may begin to see you are too heavily invested in C items with current consumer buying trends (which change monthly, if not weekly). These C items are over-sizing your inventory and holding up cash that would allow you to invest in the items you are selling most often.
- It may sound obvious: don’t tie up your money in slow moving items right now. Promote them, move them out and re-invest those dollars where it makes sense.
Once you’ve right-sized your inventory in each category, take it a step further and right-size your categories. Do you have the right inventory invested for the true size of the category? If 50% of your floor space makes up 20% of your sales, it’s time to right-size!”
Online browsing and shopping are becoming critical to success for Brick & Mortar business. What resources and tools do you recommend buyers use, and how can they prepare themselves for a new style of shopper?
Mike: “It’s critical to have a representative omni-channel approach: Brick & Mortar, social channels and a functioning website that reflects your store’s personality. Your store is unique, so you want to create the same type of unique shopping experience online. Consumer choices begin with searching on the web and seeing what works for them.
The products you have online must reflect what you have in store: don’t just list examples of brands, show that you have the full breadth of their product online. Reference specific lines. As far as pricing goes, you want it to be reflective of your store. Not only aligned with the products you carry but also with the services and resources you provide. If your customer decides they want to make a purchase they should easily see all their options (BOPIS, ship to home, etc).
You also need to provide inspiration and ideas. Just as you would in store, demonstrate what you can do with the products. Highlight trends. Show what you can do with what you are selling. It is critical to utilize digital assets that are out there to give your customer a more robust experience. Vendors have these available, as do all MacPherson’s Account Managers!
A strong social media presence allows you to get input from those who buy the products and use the products. When you think about the touchpoints (the amount of connections a customer makes with you), the reality is they are going to interact with you much more online because they can do it in the convenience of their home, or on their phone, wherever they are. More decisions are made online as to whether they are going to buy the product or not, and from where.”
We have been stressing the importance of BOPIS (Buy Online, Pick Up In Store) what can retailers do to assist their customers and staff succeed with these purchases? Have you personally used BOPIS in 2020?
Mike: “My wife and I have both used BOPIS. For me it generally has been hardware related. I know I need it, I can order it online, they have a locker system where I walk in and unlock my locker with a code and the item is waiting for me. I believe this method will continue way past the COVID pandemic. It’s very easy for consumers to continue to utilize.
It makes me think of a college bookstore. Studies show a student interacts on average four times per year with in-store visits, but they go on the website 10-12 times a year. BOPIS is a perfect option! Once the student arrives for pick-up, purchases in other categories like gum, candy or coffee are elevated. Other categories get a lift because you are getting that person in your store more often than you would normally.
When your customer has a good experience with you, online or in store, it creates loyalty. In order for your customer to have a good experience with BOPIS, the system has to be organized. How do you communicate with your customer? Do you send a text that it’s ready, or call them in advance of coming in? Consider all your touchpoints and the opportunity they allow for interfacing with your customer while you have their complete focus.
This year, holiday shopping will look a little different. Marketing early is essential. What else can stores do to prepare for the 2020 holiday season?
Mike: “Holiday sales in the art materials world tend to be later than other industries (toys, electronics, etc), so don’t be afraid to make a calculated risk to what you feel would be a good seller. Make it as interactive and inviting as possible. Marketing early is really important. A lot of consumers, I believe, will be making decisions later this year, so the more you can get ahead in your messaging selection the better. Engaging in all available touch points will resonate as the consumers get later into the season and begin to make last minute decisions. Get the message out, plant the seed in your customers minds as to what would be some nice selections. Hint what you’re bringing in. Pre-sell as much as possible. Consumers will be very conscientious of their budgets and they will want their dollars to stretch.
Depending on your omni-channel approach, curate a selection online and bring in new digital assets to support it. Curate a selection of products at different price points. Kit together items you can easily put back into inventory. Understand what is tried and true from the past, and expand upon that by adding more selection and trendy items.
What publications or resources do you use to keep on top of the most recent information?
MacPherson’s Account Managers are a wealth of information. We can tell you what has sold well, what pre-bookings look like. Outside of the company I look at RetailDive (they have podcasts if that is a more accessible medium to gather information from while you work!) and Etsy to look at trends, and the assets our manufacturers make available.
Was this article helpful to you? Do you have additional questions? Art Dog is an opportunity to spotlight challenges and opportunities in our industry, across the board. Let us know if there is something you’d like us to cover: reach out to your Account Manager or email the blog team directly at artdogblog (@) macphersonart.com.