Rules for working with stocks
25.09.2017 11432

Rules for working with stocks

When sales volumes are shrinking and prospects are not quite clear, it is important to avoid overstocking and large balances in your warehouse, our experts are sure. “Leftovers are sweet” are only for large discounters who will be able to pick up the leftovers from retail at very bargain prices and make good money on it. On the other hand, the market now presents such surprises that “the remnants will soon be more expensive than money,” some distributors are sure. At some point, the retailer may not have available funds or a loan to purchase a new collection, and the store still needs the goods - so that there are sales, turnover and profit. And the leftovers in such a situation suddenly become desirable, helping to keep the business afloat.
Elena Kabanova Elena Kabanova - Partner of Retail Atelier, head of Marketing and Advertising practice, founder of AGIOTAGE FASHION MARKET, a new anti-crisis format for commission and discount stores.

Retail atelier - a company that creates new retail formats and outsourcing the management of retail structures, in its portfolio - management of retail chains and divisions such as Snezhnaya Koroleva, Nautical, the Vulkan gaming club network, Tanuki restaurants, a chain of shoe stores Fashion Galaxy, etc.

Alexey Karakozov Alexey Karakozov - Executive Director of the shoe and accessories network ALBA. Experience in retail - more than 10 years, he began working in ALBA in 2010, in the analytical department.
ALBA company - founded in 1993, began its activities with the wholesale supply of shoes from Italy to Russia. It has been developing retail since 1998. Today operates 48 salons.

Any crisis, even a deep and long one, has one remarkable property - it must end. In the meantime, he goes, the business tries to optimize and discipline himself as much as possible. Take, for example, purchases in Europe, where we were especially loved, because we always took a lot and without bargaining. Now, thanks to the crisis, sobering has come, and the purchases of Russian entrepreneurs are becoming much more calculated. Suppliers have already realized that lean years have replaced fat years, and are ready to cooperate on new conditions. For many well-known brands, the Russian market remains too important and promising to leave because of a temporary recession. In a number of cases, factories, with the formation of excess balances, are ready to compensate for losses due to future deliveries, since long-term partnership is a priority for them.
Jacob Treskov Jacob Treskov - CEO of the international distributor SOHO-Fashion 

Require supplier to meet delivery deadlines

Different trading companies have different opportunities, economic conditions and business settings, but for all, without exception, there is a strict rule: "Sales lost today are lost forever." If the supply of shoes for one reason or another is delayed by the beginning of the new season, the consumer will not wait - the demand will be redistributed to the products of other players. Delayed goods can only be sold at a large discount during the sales season, but the effectiveness of this approach is questionable. Therefore, by hook or by crook, require the supplier to comply with the delivery time, because under the current conditions, any delay can result in serious financial losses.

Anatoly Levshin Anatoly Levshin -

general manager of the Caprice chain of stores “If the collection is selected competently, it includes good basic and current models, compiled in the correct proportion and in the right dimensional grids, then it will be successfully sold and the proportion of residuals will be minimal, within the permissible limits. If the collection is not relevant, with weak basic models, then you need to prepare for losses, miracles do not happen.

The main factors affecting the successful sale of goods in the shoe segment - competent pricing, tracking poorly-sold models and timely adjustment of their prices to increase sales in the desired range, discounts and other promotions that stimulate demand - work well today. But during the crisis, additional, so to speak, reinsurance measures are needed: a very careful selection of models and sizes in the expensive segment, reasonable margins on different groups of seasonal goods. Now, shoe sellers need to focus on working with suppliers to provide additional discounts and better financial working conditions.

For the store to work successfully, it is advisable to update the collection constantly; for the season you can afford a maximum of 35% of the balance of the old collection. You can leave the base, but not seasonal goods in the balances, which will be optimally transported to the stock store, or sold in a super-finish sale, even at a loss. I am a supporter of the sale of stale goods, the faster you get rid of it, the better for business. It’s better to sell everything and pull out money that can be put into circulation again than wait until the next season. After all, there is no guarantee that you will sell the remnants of this season next year.

I do not agree with the opinion that commodity residues may “become gold”. In the regions - yes, perhaps, but not in Moscow, where customers know very well what is in fashion and what is relevant in every season and will never take the old. If you still have the old collection, at best, the capital will actually sell 25% of its volume, the rest can be thrown away. Or send it to drains, including regional ones, where buyers are not as demanding as in Moscow and other big cities. ”

Explore customer preferences

Timeliness is one, but not the only condition that avoids the formation of excess residuals. It is necessary to monitor trends, study consumer preferences, take into account the decrease in solvent demand. Now the trend is not designer refinements, but classic comfortable shoes. Many people are accustomed to high-quality shoes, and even in the current conditions they will not switch to a cheap leather substitute - rather, frugality is expressed in the fact that they will buy not two or three pairs, but one, but still high-quality. Those who love fashion, style and relevance, too, will not give up their addictions. And when the store tries to give out the remnants of the new collection, the buyer will immediately see it, draw conclusions and permanently delete the store from its list. If you properly take into account all the current market features and changing consumer preferences at the planning and contracting stages with suppliers, you can reduce the risk of large balances.

Do not get carried away with discounts

There are showrooms that deliver goods fractionally, in small batches, strictly on order, and, thanks to this form of work, they do not experience any headache with leftovers. But these are exceptions. The vast majority of companies import large quantities of goods and must somehow provide sales. As the market is very mobile today, many shoe retail companies are forced to abandon annual planning and switch to quarterly at best. For confident sales, a sound pricing policy is very important. When the ruble fell, some market players could not stand the nerves, and they pushed up prices, but then quickly came to their senses and themselves began to bring them down - already under the guise of sales. In general, now there are a lot of sales, discounts, promotions, but when there are too many of them, a negative effect appears: “sales” disorient the buyer, spoil the average check, and knock down the sale of a new collection. A more sensible approach, albeit more difficult to implement, would be comprehensive optimization measures that can keep prices up at about 15-20% compared to last year. Such optimization necessarily includes making a painful decision to reduce the margin and trade margin.

Work on leftovers

If, nevertheless, balances have appeared, then it is necessary to determine the degree of their liquidity and act. It is important not to “overexpose” the leftovers. For each model, the approach should be individual. Trendy models that fall into the trend for one season should be discounted and said goodbye to them in the near future, since in the foreseeable future they will be of little interest to anyone. The implementation of basic and classic models can be extended for several seasons, but do not apply the galloping discount scenario to them, when during the sale the model is sold at a 70% discount, and at the beginning of the new season the price returns to the previous level - this is wrong and causes negative feelings at the buyer.

When a decision on liquidation of balances is made in principle, the companies begin to make calculations, which can take into account the payback of the purchase and the payback ratio, the actual mark-up, inventory turnover, the amount of forecasted balances at the end of the season and other criteria. Some sellers will be more interested in the rate of liquidation, while others will be interested in price and margin. Someone has their own discount centers and online stores, someone's choice is limited to a massive sale or transfer of balances for sale to stock networks. Various combinations are possible, which depend on many circumstances: the volume and age of the residues, the quality of the shoes, the season, the deadlines, the qualifications of negotiators, the level of trust between partners. No matter how successful the company is, as a result, with the leftovers, it will be a useful experience and a good lesson for the future. The balances have the right to exist at all times, since we are talking about the most complete assortment satisfaction of the buyer, but their volumes should not exceed reasonable limits, since we are talking about the financial well-being of the company.

This article was published in the 128 issue of the print version of the magazine.

When sales volumes are shrinking and the prospects are not entirely clear, it is important to avoid overstocking and large balances in your warehouse, we are sure ...
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