It is one of those Mondays in August 2015 and your store is fully operational. Spends are amazing due new arrivals in May and you have trained your team well. During the day you have visited the stores and saw what you used to see: a crowdy store with a small queue at till point. End of the day you are checking the spend of your stores and spend is slightly below the average but still over budget. Must be an ‘off’ day, can happen. Next couple of days the same occurs however the trend is declining every day. On a daily basis you are checking the visitor mix and this week the share of groups is higher than the weeks before. This must be the case. The next Monday you sit in business reviews and being challenged on your declining performance despite the fact spends are still over budget. You use the argument of visitor mix and are confident it will be on the ‘old’ level this week. The second week the spend is declining even more and now you start your sales analysis. You see a change of your top sellers over the last 2 weeks.
You start to ask your team what the reason could be for the change in your top sellers. The answer is simple: they are out of stock. You are checking your stock system and see that there must be some boxes left in the stock room however checking the stock room: there are no boxes left. After asking your administrative assistant regarding this topic he mentioned that apparently he booked in the delivery twice which he needed to correct but he forgot. Meaning that it is correct that there is no stock left of these products!
The products were delivering 15% of the revenue which is now a loss as the majority is not captured by the rest of the assortment. Since these new arrivals are produced in the Far East the lead time is 12 weeks which means that you will remain a gap of 15% during your key trading period.
With this in mind you are checking the rest of the products with a dissatisfied result. It turns out that a couple of local produced best sellers will be out of stock soon with a lead time of 5 working days. The mistake of the assistant is costing you 15% or even more of the revenue in your key trade period. Or was it your own mistake by not checking it frequently? Anyway you should always check the stock levels yourself prior key trade periods.
Next blog regarding Stock Management will be about the stock management cycle.
Below some stock management tips in the meantime, which should help you prevent from out of stock issues:
1. Know your best sellers
2. Be aware of lead times
3. Forecast visitor volume and mix
4. Check your stock levels before key trade periods
5. Always check the system and your stock room
6. Try to stock all best sellers in the same area in your stock room
