Tuesday, May 10, 2011

The Case Against Category Management –Exercise #4 -3


The next step in Exercise #4 is to find the items in your store that have never sold. This store has made great progress in eliminating much of its dead stock, but it still needs to make some improvements.

Doing a quick search, I found $5,282.09 worth of inventory that is just dead-dead, only 6 percent of the stock: http://www.cstorepod.com/html/exercise__4_-3.html.

I can’t show you the individual items because it would be unfair to some suppliers and manufacturers; mainly because, other than an item being a poor seller, there could be a plethora of other reasons a particular item does not sell in a specific store. A few of them might be:
1.       The neighborhood where the store is located
2.       Bad pricing
3.       Poor presentation
4.       Out-of-date merchandise

In this store, the worst classification appears to be ‘Clothing’, consisting of mainly caps, doo rags and bandannas, with a mixture of sports shoes, bracelets, watches, etc.

‘Miscellaneous’ includes statues, wind chimes, signs, bird houses, fishing supplies, sports patches, decals, etc.

‘Household Products’ are made up of soaps, cooking utensils, furniture polish, paper plates, plastic cups, cutlery, drain cleaner, insect spray, etc.

The ‘Cigarettes’  classification includes items, some of which are several years old and located under the counters and in the stockrooms. They should be returned to the supplier or thrown away. The store supervisors should be taking care of this.

Some of the items in this store are perishable and were never picked up. It amazes me when I find items in plain sight and their presence is ignored by store personnel. For example, candy with opened wrappers or mice-chewed ends; cans with dust so thick the bar code is unreadable; dusty cigarette packs that crunch when you squeeze them; pastries with mold clearly showing through packages; leaking or broken drinks in coolers; dirty toys that no one would touch, except for maybe toddlers, who will often put anything in their mouths; auto accessories hanging on pegs with parts missing, haphazardly taped back together with scotch tape; DVDs in filthy boxes, books and writing paper, tacks and hair nets, etc., etc.  What kind of impression do customers get when they encounter these things?

When searching for items, I have found some that were never received into inventory. If it’s never taken up to the cash register, they are simply transparent, even though they were paid for and are carried on the company’s books. Cell phone accessories come and go and are extremely hard to track, as are DVDs, statuettes and other trinkets.

I know cigarette lighters are good profit makers, but do we literally need thousands of them in the stores? It always amazes me when I see a new shipment come in. Honestly, do retailers really think customers care about the endless colors and designs? How many different brands of 10w40 oil does a store need? There seems to be an infinite assortment of the same drinks in cans, bottles, liters, etc. Do manufactures think customers might prefer a 24 ounce drink over a 20 ounce one, or are they just trying to commandeer additional cooler space? 

Notwithstanding the ugly mess, the most disturbing thing about dead inventory is the space it occupies. Space that could be recovered where stock could be placed that will sell and make profits for the stores.  If we could replace the dead stock in this store with similar priced items that turn only once a month, it could mean an extra $13,311 gross profit for this store. 

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