by Bryan Winter
No, it's not the Retro Sixties Flashback Fantasy version of In The Trenches, so put away those beads and get yourself a haircut. And while I'm at it, stop wearing those throwback Seventies flare-bottomed polyester-shining get-away-from- that-open-flame digs. I for one was alive and conscious during the disco years and I still wake up screaming. OK, that said, let's get on to the task at hand. This month I'm taking my turn and talking about "turning." You know what "overhead" is (if you don't, get yourself to a Small Business Workshop at your local community college). Overhead is what costs you valuable cash. Your store, your personnel, your lights, your vacuum cleaner, and even your shelves are overhead. But the biggest overhead you have is what is sitting on those shelves your inventory. This is the stuff that keeps you eating, but only if you "turn" it out the door. The concept of turning your inventory is simple. You want to sell the items in your store, of course. But that's not enough. What you really want to do is make sure you sell the items in your store over and over again. It's a cycle. You bring in an item, sell it, order another one, sell it, order another, and so on. This revolving cycle is the primary goal of every retailer. Make sure it is yours as well. The "experts" say that a good turning rate is 5 to 6. That means that your goal should be to turn every item in your store five or six times during a fiscal year. What that really means is that you have to sell your entire store's inventory five to six times every year in order to make a profit. Quite a feat! Now take a look at that dusty old copy of Goober Wars in the corner. Man, you haven't sold that thing in three years. This is where it gets tricky. You want to have a good selection to offer your customers. That is vital. But that also means you are going to have to bring in a few obscure items in order to maintain that selection. You know they won't turn, but they will give your customers the feeling that your store has "everything," thereby increasing turns in other areas. The important thing to realize is that unless you sell five or six copies of Goober Wars during a single year, that game is not turning a profit. Keep the concept of turning your inventory in head at all times, especially when you are ordering. You don't need to order an entire year's worth of a product in one sitting. Instead, you can design your ordering system around turning. Wait for a product to sell, and then order another. The game distributors usually do a pretty good job about getting your order to you within a day or two. Only order an item when it sells out (or in the case of a hot mover, order when inventory is at a low point). Let the distributors sit on the overhead for you. That way you can afford to bring in more obscure titles that will make your customers happy. Don't consider these items money-makers. Instead, consider them "investments." Endeavor for inventory that is "an inch deep and a mile wide." So where is the balance for your store? Good question, and one only you can answer. There are games that take up the slack and turn dozens of times in a year. That is natural. But remember, those games are not only paying your heating bill, they are paying for your overhead that is not turning. It is indeed a balancing act! Measure the profitability of each shelf in your store, and then make changes to reflect the turning potential of each shelf.- If your TSR section makes you the most money, why are you shoving it all into one small area? Products should be displayed at a proportion of their profitability. If TSR is making six times the profit of another company, give TSR products six times more space. That way, you balance turning power among your shelves. I'll bet lately your biggest money-makers are taking up the least amount of space in your store: collectable card games. I'm going to devote all of next month's feature to these little buggers... But for now, take a look at that pile of Fallen Arches in the comer and remember that a pile of product that does not turn, turn, turn will just make you pay, pay, pay. Back to Shadis #26 Table of Contents Back to Shadis List of Issues Back to MagWeb Master List of Magazines © Copyright 1996 by Alderac Entertainment Group This article appears in MagWeb (Magazine Web) on the Internet World Wide Web. Other military history articles and gaming articles are available at http://www.magweb.com |