An objective analysis of stock performance in many newsagencies will reveal serious problems.
Outside of magazines and cards which are effectively managed for us – yes with mixed degrees of success but outside out direct control nevertheless – newsagents have stock which is grossly underperforming.
In stationery, for example, an average newsagency will have around 33% of stock losing money for the business. Similar numbers can be found in other departments over which the business has direct control.
Newsagents can easily identify this under-performing stock and make the tough decisions which the performance data demands.
So why is this not done?
That is the million dollar question. Literally.
Imagine a newsagency with $30,000 invested in stationery. It is likely that $10,000 of the investment is non-performing. If you had $10,000 in a bank which was not paying interest you would move it, chasing income. Why is it that newsagents do not take the same approach when managing stock in their businesses?
Identifying and cutting dead stock is easy. In any good newsagency software package there are reports which identify underperforming stock, stock turn, Return on Investment, an analysis of supplier performance and detailed sales analysis.
Any and all of these reporting options can identify dead stock, the thousands of dollars in underperforming capital waiting to be freed and put to better use.
Newsagents don’t need help to do this, they just need to start using their software and making business decisions based on the information in the reports produced by the software.
Newsagents can avoid repeating bad buying decisions by ordering only what sells, unless it is an entirely new line. Just switching to this responsive approach to ordering will reduce dead stock and put more money in the bank account of the business.
But again, why is this not done?
I suspect it has to do with many newsagents getting used to suppliers like magazine companies, card companies and many stationery companies doing this work for us.
If you can stop a rep from a supplier creating an order for you, do so. Take control, buy what is selling and get rid of dead stock from your business.
Sure you will have more shelf space in your business, that is a good thing as it presents opportunities. Not taking action because you are concerned about empty shelves suggest you are probably not a profit motivated newsagent.
If you are a newsagent and have got this far in reading this post, find out how to report in dead stock using your computer system. Run the report(s) and take a cold hard look at the performance of your stock investment. Make the tough decisions. Chase a better return on your stock investment.
Remember, it is your money.