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2021 Is The Ultimate Year for Inventory Management | February 15, 2021 (0 comments)
Encinitas, CA—2020 is behind us—or is it? 2020 lingers on into 2021 with more challenges.
While the initial stress of the pandemic has come down from a boiling point to a simmer in the last several months—and the initial shock has become a daily news update—lockdowns continue worldwide. And yet, remarkably, our industry has outperformed what anyone might have projected when this all began a year ago. There is relief in seeing jewelry sales continuing upward and customers comfortable spending. For a retailer, this is usually incentive to boost inventory and advertising, but is this the right strategy??
We would like to pose a question for you to consider: How should you manage your business during these uncertain and continually changing times?
Manage what you know and do so aggressively! What you sold well in 2020 should be easily identifiable, and you should nurture that part of your business. We saw a surge in bridal purchases across the country as well as other product categories, such as diamond stud earrings and lab grown diamonds (a conversation for another time). Inventory and sales analyses are specific to your business and requires your immediate attention.
Most jewelers are seeing their balance sheets look better than they have in a long time. We know this is a direct result of two factors; the PPP (and perhaps the EIDL, and possibly a second PPP) in conjunction with less buying. An influx of cash and a decrease in inventory / accounts payable will always result in a healthier balance sheet. We encourage you to do three things with this position:
1. Put some dollars away in that ‘rainy day account’ you heard so much about last year. This needs no further explanation.
2. Take a good look at your sales from last year and let that lead you in your purchases now.The year 2021 should be about strategic management of your buying. “Strategic” meaning detailed planning for how and when you purchase. This pandemic and all its ramifications are far from over. The world is in a better place than it was a year ago, with vaccinations and treatments available. However, as you look ahead to new variants, questions about the vaccines, and potentially more lockdowns worldwide, you must step up and take control of what you actually have control of: your inventory!
For so many reasons, buying into what you sold last year is critical. Perhaps your customer changed, or you may have picked up market share because some competitors did not make it. Did these changes affect your special orders? Were you walking customers because you did not have what they were looking for? Do you need to alter your assortment to meet what customers are looking for specifically in your market? With the new year carrying along last year’s baggage, it is time to address these questions to determine what may be your new direction in sales and inventory needs. Now is the time to buy into that assortment.
3. Don’t postpone replenishing items that have proven successful for your store. As a reminder, it is all about inventory turn! Items that sold well last year will certainly continue to do well this year. Are you stocked for those needs? Do not allow yourself to be short on inventory that is certainly able to sell through again. Keeping proven inventory on hand will continually boost your cash flow.
With major buying events being postponed or even cancelled, it is imperative to keep a good working relationship with existing manufacturers to maintain supply flow. As of today, major manufacturing centers--such as significant portions of both Israel and India--remain closed or are operating at reduced capacity. We do not know if the revised tradeshow schedule will be changed yet again, thus affecting what delivery times will look like. You should anticipate future inventory requirements, paired with longer lead times, to be certain you are able to meet the needs of your store.
Manage what you can:
- Restock fast selling merchandise
- Avoid the urge to overspend just because you have the money in the bank
- Stay connected to your customer base in a meaningful way
Until this pandemic becomes a thing of the past, jewelry retailers will have the unusual opportunity to exponentially grow sales. As we have said before, there is undoubtedly pent-up demand for travel and when this major competitor is no longer sidelined, things will change.
Retailers in many ways are getting to hit the restart button: a better financial position with the restructuring of assets and debt and the opportunity to help members of your community celebrate their love in a lasting way with a special piece of jewelry. We are one of the few industries who can experience and bring something good out of this time of despair. Let’s make the most of it!
Dan and Lori Askew of Vantage Group strategically examine each area of business and address concerns efficiently to make the greatest impact on cash flow, merchandise planning, inventory control, advertising, and store management. www.VantageGroupinfo.com