I know if I had created a topic called ‘knowing your numbers’, I probably would’ve lost most of you before you had even got past the heading because, let’s face it, who likes sitting down at night pouring over statistics? Well, me for one. But, strangely enough, many people don't enjoy doing this. And while the three steps below involve numbers, I assure you that the results will revolutionise how you see and treat your products in store.
1 Find out which 20 per cent of your products bring in roughly 80 per cent of your income
I’m sure that you’ve heard of the 80/20 principle, also known as the Pareto Principle. It’s essentially a prediction that 80 per cent of the results come from 20 per cent of the effort. In the same way, approximately 80 per cent of your shop sales come from roughly 20 per cent of your products. WOW right?
There are many ways to work out which products they are―you could look at your supplier orders and tally up which stock you’re re-ordering most frequently. You could export the information from your sales system, or you could even ask your suppliers to report back to you on your most ordered products. The main thing is that you choose a period of time and find out which 20 per cent of the products brought in 80 per cent of the income to get a list of top selling products.
2 Find ways to increase sales of those 20 per cent of products
This is where we maximise results from minimal effort, because if you find ways to increase the sales of this group of products, it will have the maximum effect on your sales. As the products are already selling well, consider how you could sell more of each of them. Where are the products located in store―could they be in a better location? Could they be in more than one location to ensure every shopper sees the products?
And it’s not just about selling more of those key products because you can use these to encourage upselling. For example, a top selling candle holder can sit next to a perfectly colour matched set of tea light candles which will encourage the customer to purchase more than just the candle holder.
3 Find out how you keep those 20 per cent of products in stock
One of the things that frustrate us the most in our Mornington store is missing out on sales. When you know what your top sellers are―the 20 per cent of products―and you happen to be out of stock, you’re most likely missing out on sales. Just because you have other products available, you’re not guaranteed to sell them instead. That’s why it’s important to have information from your suppliers as to how long it will take to replenish your stock lines.
If you know that a supplier takes two weeks to deliver, ensure you have enough back stock to last the time. Suppliers also unfortunately run out of stock. So, once you’ve identified your top sellers, it would be useful to speak with your suppliers on a regular basis. When ordering, ask about any potential stock issues. Then you will be able to order accordingly.
So, if 80 per cent of your sales are coming from 20 per cent of your products, and you focus your efforts in finding out what these products are, increasing their sales, and keeping them in stock, you’re bound to have a positive impact on your sales.
This begs the question: what do you do with the remaining 80 per cent of stock in store that’s only bringing in 20 per cent of your income? I explain more about this in the video below.
By Nyree Hibberd , founder of Koh Living