Live From JCK Las Vegas: Understanding Retail Inventory Performance

Providing solutions to the age-old retailer dilemma of how to move stagnant inventory was the subject of Lynn Baldwin’s “Understanding Your Retail Inventory Key Performance Indicators (KPIs)” seminar Thursday afternoon.

Baldwin, who heads up U.S. operations for retail consultancy firm The Edge Retail Academy, mixed acerbic humor, tough love, and memorable mantras to communicate to the small crowd one primary message: If you’re not moving merchandise out the door within six months of buying it, you’re not managing your inventory properly.

“You’re not going to get any miracles out of this session,” Baldwin drawled in his deep Southern accent, “so if any of you are not willing to go back to your business and implement some changes, there’s a prayer room down the hall, and you may be more comfortable in there.”

Displaying a pie graph entitled “KPI Inventory Fitness Chart for U.S. Stores,” he revealed that the inventory in most stores is composed of 74 percent old merchandise (defined as six months or older), and only 6 percent of what he calls fast sellers—items that turn over at least eight times a year. The problem? Old stock constitutes only 38 percent of sales, while fast sellers make up 62 percent of sales. “The customer is telling you this is the stuff that we want to buy, and you’re carrying 6 percent of it,” explained Baldwin.

Buying the same hot sellers over and over was his first tip in solving the stagnant-inventory conundrum. “If something sells fast, buy it again,” he said. “If you don’t buy it, it’s you refusing to believe that you bought the right thing the first time. Have a little faith in yourself. And if you don’t think people in your market want to buy what other people want to buy, I urge you to go down to your local country club and count the white SUVs in the parking lot.”

Baldwin also asked the retailer-heavy audience to be mindful of buying -jewelry without a certain customer in mind, and urged the crowd to follow through with the necessary marketing and -merchandising required to push products out the door. For example: “Very few young people read newspapers anymore,” he said, “so you need to be marketing on the Web.”

Another tip: Have an exit strategy for unloading unwanted merch before you even purchase—even if that means viewing unsold inventory as raw material for future fast sellers. “It’s far better than scraping it out for 20 cents on the dollar,” Baldwin noted.

Finally, he challenged the audience to list one thing each morning “that you could do that would make a significant, positive difference to your business results.” Baldwin argued that listing more than a single item usually results in inactivity all around. “If your list has three things on it, you won’t do any of them. Pick one thing and stay on it like a laser.”