Tell us about your background and how you got into retail, inventory management systems and merchandising.
I co-founded Momentum in June of 2007 and was mentored early on as to the importance of inventory management systems. I had implemented some great systems, but as the business grew it was too much to rely on my instincts and memory to keep thousands of SKU’s and quantities in order. I modified and expanded the systems to help make my inventory control systems work for me, rather than constantly playing catch up to keep the system afloat. Pretty quickly I realized the logistical and financial benefits of staying on top of my inventory. It saved me a tremendous amount of time and helped me optimize sales by keeping the right quantities of good-selling products in the shop and making sure I never ran out. I was also able to move low-performing items out of the shop quickly before they started to drag the shop down.
What are some common mistakes you see retailers making when it comes to inventory management and merchandising?
The biggest mistake most retailers make when opening their shops is either not getting a good POS (Point of Sale) system or not getting one at all. Having the right POS system will make your inventory management systems that much easier. On the flip side, many people get great POS systems but never use them to help manage their inventory. The trick is to utilize the capacity of your POS system to stay on top of your inventory. Once you let your systems get away from you it’s harder to catch up. Many retailers find out after years of operation that they should have been doing things that they aren’t and the prospect of changing their processes is overwhelming, causing them to put it off further.
When it comes to merchandising, you have to spend money. Buy beautiful displays, get good fixtures and spend time looking at other stores and places like Pinterest for ideas on creative displays. You have to make your products pop and ensure they look valuable. The days of putting beautiful handmade products on a glass shelf or a plywood display case and then selling based on their story alone are over. It is an area of retailing that most smaller brick and mortar shops think they can cut corners on. The result is stagnant or declining sales.
If you were going to open up another store tomorrow, is there a price point you would focus on? How do you find the right balance when pricing your inventory?
You really have to know your market. When Momentum first opened, we carried some beautiful high-end weavings from Peru that were true works of art. We thought they would sell like crazy. They didn’t and we had to shift our focus and price points to a level that was what the local market demanded. Again, this all ties into the importance of inventory control and your ability to know what is selling and at what rates. That is where a POS system is critical to your operation. You will be able to see in real time what your average sale is on a daily, monthly and annual level. You can then focus your core inventory to meet that demand.
Based on your experience, where are many retailers losing sales opportunities?
The biggest loss in sales opportunities is probably the most overlooked aspect of brick and mortar retail. Most folks will look to omni-channel options to grow their reach and this is fine if you are running a well-oiled operation from the outset. The greatest missed sales opportunity is the simplest - having the right merchandise, at the right time, and in the right quantity. This is true inventory control and it’s what gives you the cash flow to bring in new merchandise that keeps your shop looking fresh. If you run out of an item because you are not tracking it properly and setting min and max thresholds then you are losing sales.
What are some of the top challenges retailers are facing when it comes to inventory management and merchandising? Do you have any tips for overcoming those challenges?
The biggest challenge when it comes to inventory control is having the time to do it. If you haven’t done it since you opened, the first time will seem overwhelming, but you will thank yourself once you do it. From there you are just maintaining the system you created. That’s much easier and you will see the results. Build the management system into your operations, set aside the time to do it, hire the right people to help you or cover you so you can do it. If you don’t, your sales will suffer.
What are some of your tips for keeping inventory looking new and fresh?
Every month you should sit down and do a quick evaluation of every item that came in three months prior. Do a quick calculation as to how it has performed and determine if it makes the sales cut for your shop. If it does, you can then set an accurate min/max number to keep the inventory for that item optimized. If it doesn’t make the cut, you should mark it as unorderable and get rid of it.
You should also do a full evaluation of every item in your system twice a year. As you get rid of new items and items that slow down when you do full item evaluation, you make room for more merchandise. In theory then you should be bringing in new items every month.
You also want to do minor floor moves once a month and at least two major floor moves every year. The psychological effect of just moving things around in your shop is profound, even to your regular customers.
What were some of the key tactics you used to grow your brick and mortar business?
Growing the business can be a bit out of your hands but if you are doing things “right"- i.e. inventory control, measured purchasing, creative visual merchandising, training of employees and customer service then you should see your business grow.
Properly training employees and implementing high customer service standards can often be what sets you apart from other retail shops. You really want your customers to leave your shop feeling like that was the best experience of their lives. You want them to tell all their friends, bring out-of-town guests in and think of your shop as their go-to place.
What you do “behind the curtain” matters but if you just fill your sales floor with employees who double as warm bodies then your customers will experience that and you will be nothing special to them. Train your employees well, have high expectations of them, hold them to those standards and reward your customers for their loyalty with a generous, free and fun loyalty program.
Where do you see brick and mortar moving in the future?
As much as we all have to use the internet to get certain things and some of us only buy on the internet, I don’t think it is the future. The ease of online purchasing has become so ubiquitous in the past few years it is impossible to ignore but it is wholly unfulfilling. Consumers are becoming aware of that.
I am seeing a shift towards shoppers wanting that connection again. Online shopping is not going away so if you are a brick and mortar retailer you need to focus 90-95% of your energy on your physical location and get that running like a well-oiled machine. But invest some time in having an online portal for regulars and tourists to visit and still support you. Again, we are humans and we crave connection. Create a space where the connection is real and fulfilling and they will come!
For more info email: kevin@kevinnatapow.com