The definitive 6 Key Actions to Improve Retail Stock Management for Higher Sales and Profits for 2024

Managing retail stock effectively is crucial for the success of your salon or spa. By implementing the right strategies, you can optimize your stock levels, increase sales, and maximize profits. However, it is not always possible to get everything done. In this article, we will discuss the seven key actions that you should take to improve how you manage your retail stock in 2024, the ones that would deliver the biggest return.

1. Stock take

2. Product categorisation for every retail product

3. Sales analysis

4. Streamlining of the product offer, less is more

5. Give your bestsellers the attention they deserve

6. Train and incentivise your team

1 . - Regular stock takes

Regular stock takes are essential for maintaining accurate inventory records. By conducting frequent stock takes, you can identify any discrepancies between your recorded stock levels and the actual stock on hand. This helps you to prevent stockouts or overstocking, which can result in lost sales or excess carrying costs.

Additionally, stock takes provide valuable insights into your stock turnover rate, allowing you to make informed decisions about reordering and replenishment. And a stock take

2 . - Categorise your complete product offer

Categorizing each product you sell based on its end use, type, brand, and relevant collections can greatly enhance your stock management processes. By creating clear categories, you can easily identify which products are selling well and which ones are underperforming. This enables you to allocate resources effectively, ensuring that you invest in the areas your customers are buying from. It also facilitates targeted marketing efforts and helps you streamline your product offerings.

3 . - Sales analysis

Analyzing your sales data is crucial for understanding customer preferences and aligning your stock level accordingly. By analysing your sales you will be able to fulfilled your customers requirements, providing an enhance experience.

Your analysis should look at your sales by line, so you can work out your best sellers, and it should take into account any out of stock. It may be a good time to revisit a post about Rate of Sale, and how you can use the concept to compare sales of different products.

Once you have look at the detail at level, it will be easy to agreegate and look at your sales and stock at category level. You should then be able to compare your sales and stock positions. For example if shampoos are 25% of your sales and 23% of your stock, you will know that you are there or thereabouts. However, if for example, treatments are 5% of your cash sales, but account for 18% of your stock you have got an issue. You have got on one side, the opportunity cost, the forgone profits for not having more stock in another category, but also you have got wastage risk. How long will it take to clear all that stock?

Use this newly adquire knowledge to inform your future buying, to make data-driven decisions about your stock allocation, and how you invest your cash when purchasing

4. - Less is more: streamline your product offer.

Streamlining your product offerings is an effective way to optimize your stock management. Take a close look at each product and collection you offer and evaluate whether they each provide something unique to your customers.

By eliminating repetition, and getting rid of redundant or low-performing products, you can free up valuable shelf space and focus on the items that generate the most sales. This not only improves efficiency but also enhances the overall shopping experience for your customers. Your client has in front a much clearer, concised and easy to understand offering.

In my experience, a product offer that is too wide, with far too many different products is normally is a sign of a business that is not 100% clear on what customers want. As a result, it is hedging its bets by offering a bit of everything. It was once describe as spraying and pray, you offer a bit of everything, and hope that enough will sell.

5.- Give bestsellers the attention they deserve.

This may not be true in all business, but in most salons and spas you will find hero products. These are products that generated a disproportionate amount of revenue. You have probably all heard about the pareto rule, which applies in many sectors, 80% of your revenue will be generated by 20% of your stock. The exact percentages are less important, but have a look at your own sales, and find your bestsellers....

Are you giving these lines the attention they warrant based on the sales and profit they generate for your business? You should work out the revenue loss everytime you are out of stock, it can be sobering.

Consider creating line cards for these hero products, weekly sales and stock forecast at line level. By analyzing historical sales data and considering external factors such as seasonality or promotions, you can predict future demand more accurately. By analyzing historical sales data and considering external factors such as seasonality or promotions, you can predict future demand more accurately, and say good bye to out of stock on your best selling lines.

You can go a step further and implement a hero product strategy, making your bestsellers the core of your sales strategy. It is a different take on the idea of playing to your strenghts, but I will leave this for a future post. In the meantime, you may want to have a look at this excellent article.

6. - Train and incentivise your team

From your clients point of view, there is no stronger endorsement for a haircare producct that the one from her stylist. The education can begin at the chair, for example introducing the products that the stylist is using. However, this requires for you to:

• Provide product training, equiping your team with the knowledge they need to confidently use the product and educate the customer.

• Incentivise your team so they also benefit from retail. You can make retail part of the job description, but you should ensure that your team feels rewarded. A basic commision structure that can be top up by further incentives, through staff's pay checks or others, such as extra time off, retail discounts. We can work with you to design a staff incentive that is self-funding, with the trigger level for the increase payout linked to increase profits.