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I Had Turnover All Wrong! |  October 20, 2021 (1 comment)


Napa, CA—For decades, we taught turnover to thousands of people throughout the country, showing example after example of high turns, low turns and what we thought was the ideal range for inventory turns. Whether on Webinars, one-on-ones, trade-show presentations, Plexus group meetings – the conversation about turnover was the same, how to improve turn.

Recently, however, I came to the conclusion that I had it all wrong.

As I was preparing a presentation, titled Don’t Waste a Good Crisis, for the recent AGS Conclave, I began outlining how to fuel growth in this very unusual year. With sales being up so much over 2020 and inventories, for the most part, being much leaner than in past years, the current situation was different. So much so that for the first time I saw turnover itself very differently. Because of this, I asked myself the question:

What is turnover?

And then I asked the Conclave audience. The answers were similar to: It is the relationship between Cost of Goods Sold & Inventory, or a goal to hit. And yes, that’s what we have all accepted as turnover but I came to realize that those things are really not what turn is all about.

Turnover is not a number. Turnover is not a goal. Turnover is an analysis!

Turnover is an analysis because the number, or the goal, changes each and every time you dig a little deeper into the data. Below is the example I used for the AGS presentation.

This is a single store doing over $5 Million with a 1.59 turnover. Most people would be very happy with this result, but since we were talking about how to fuel growth, we need to drill into each category, vendor and price point. As I started drilling into the data, it hit me up-top the side of the head. I had been thinking about the goal all wrong. The goal isn’t to improve turnover. The goal is to improve sales!

I selected four of this store’s top performing categories by turnover. As you can see above, nearly 25% of this store’s sales came from just these four categories, each with between 2.5x & nearly 5x inventory turns. You know by now that this isn’t the end of the is story and more analysis needs to take place, so I drilled into each category by price point.

Beginning with Diamond Pendants, the next level down is a Price-Point analysis. Fueling growth in a rapidly increasing sales environment that most everyone is experiencing this year is about identifying where exactly you need to feed your inventory. Where to step on the accelerator if you will. 

For those of you who have been reading my newsletters for the past 20 years, this is not new information, so what’s different? What changed for me was how I think about the process. So many people get caught up in achieving their turn goals (or GMROI goals), with those things being the end of the conversation. But I now believe we need to evolve the thought process itself.

Sure, the goal is about how to grow sales, and it always has been, but I wanted to make this point specifically, that chasing the number is not how we should be thinking about this. Yet we are often asked the question, ‘what should turn be?’ How do you feed the areas of rapid sales increases? By knowing where to increase your merchandise assortments and feed the machine, especially when sales are booming. Turnover is not a number or a goal – turnover is an analysis. 

Beginning with the company and diving into ever more granular layers of your business; by vendor, category, price-point and style, your job isn’t to hit a turn goal – your job is to analyze it. Don’t wait another day, Christmas is coming.

As always, I look forward to your comments.

BIG designs solutions for the wide variety of issues facing the jewelry industry. From the complex and multi-faceted process of merchandising to the challenges of inventory management, BIG has solutions that help jewelers better understand and control their businesses. Call (707) 257-1456 or visit

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Comments (1):

Such a good point Abe: The thought “process” is the point, and what we do beyond pegging the turnover number is the work. Your phrase “feeding the machine” really resonates with me. Inventory, in the right places, is simply fuel for cash growth. In the wrong places, it’s fuel for fat cells.  If we think about feeding our sales machine the right food in the right places at the right times, cash flow grows (and the dreaded inventory assets line doesn’t)! Thanks for this 😊.

By Andrea Hill on Oct 22nd, 2021 at 12:11pm

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