Dead stock, stock which is not paying its way, can cost a newsagency thousands of dollars a year, tens of thousands in some cases.
The non-circulation categories where I see the most dead stock are: everyday pens, premium pens, home office products, lifestyle greeting cards, maps and certain social stationery / gift lines.
Tobacco related products is probably the best managed category.
Newsagents who rely on supplier representatives to order for them have, from what I see, more dead stock than those who order using their newsagency computer system based on actual sales. This is especially true in the pen and social stationery / gift areas.
Supplier representatives are usually at least part paid by commission and while they will protest at what I am writing here, human nature is such that they will put their needs ahead of the needs of their customers given that few newsagents check the stock turn and return on investment of what is ordered on their behalf.
Newsagents like that suppliers provide the labour to order, price and put out stock. They see this as a benefit without realising that this benefit can come with an extraordinarily high cost.
If you have a computer system, use it. Stop letting suppliers order on your behalf. Start ordering for yourself based on sales. You will save time and money. Profitability will rise as a result.
In the lifestyle card area, ask your car company for an in-depth analysis of sales for each lifestyle range you have. Look carefully at stock turn and analyse this against the cost of the real estate these cards are taking in your store. You could probably lose some lifestyle ranges without any impact on overall revenue.
My core point here is that we need to take control of the stock on our shop floor. We bleat and moan about magazines yet we all too often to not apply even basic retail management principles to the areas of our business over which we do have control.
Start with pens:
- Tell your reps that you will order for yourself.
- Set up your desired stock on hand in your computer system so that an order is triggered at a stock level you feel is right.
- Do a spot stock take to gauge the impact of theft.
- Reorder yourself for six months and compare your stock investment to the same six months a year earlier.
- Quit entire brands which are not paying their way. Let the numbers guide your decisions and not your relationship with your sales rep.
If you are like other newsagents who have done this you will find that sales are the same or higher and that your cost of goods is down by as much as 25%. That is money in your pocket.
Sure there is extra work involved. It means you take more control over your newsagency. There is no harm in that!
We stopped letting pen reps order for us when we put a system in late last year. We spent half between January and August this year on what we did all last year and our pen sales are up 8%. We were getting overloaded.
Commonsense advice Mark. The pen companies hat it when you tell them you will control what they order. I freed up just over $1,500 last year with no loss of sales doing what you have suggested to me at the time.
Good and timely advice. I ran a report of non performing stock today and there it is, $8,000 in stationery alone. I guess it is time for a stationery sale.