Think Total Contribution to Sales

Here is the forth component to the Twelve Components You Need in Your Merchandising Plan: Think Total Contribution to Sales. Consider the profit margin for each item and how many times an item is going to turn over. There are trendy items that you might be able to turn over four or five times and other items that may not turn over even twice a year. Take a look at the total dollars of contribution the item is making in a complete season or year. Here higher priced ticket items can make sense to stock based on total contribution to total sales dollars. But also look for items that you can bring in for a specific selling season and get multiple turns. These items must be considered more these days. Think total contribution to sales and not just sale price or just profit margin. 

Before bringing in an item consider the cost of training and promotion along with the average days in inventory you might expect it to be with you before selling. Be sure that products you are reordering are in season. There are some seasonal items that should not be automatically reordered. Make sure the item fits with your immediate sales projections, by category, by item. 

There is no one policy fits all here. Each category of each jewelry store will have to constantly be testing to see what customers are most inclined to purchase. It takes a steady approach by category to find the items that have the right profit margin and turnover rate to create the greatest contribution to total sales.

Out of stocks can be a real barrier to improved inventory management performance. Consider selecting suppliers based on their ability to quickly restock items. You need to work with suppliers that have very low repurchasing minimums and very low restocking minimums to improve total contribution to sales by increasing your total number of turns of your most popular and most profitable items.