Last week we discussed the 3 steps shoe retailers need to take to stay relevant during the dreaded “Retail Apocalypse.” We also briefly looked at what that meant and how it may impact your livelihood very shortly. If you missed it, feel free to catch up here. One of those steps was keeping accurate inventory online. But how does one go about completing such a feat? That’s exactly what we will discuss today.
Before we go any further though, I want to talk about competition. For those of you who may have just started reading these, I was raised in the retail world. My father, his father, and many members of my family all own retail stores or restaurants. Some would say I was luckier than most people because I always knew my father was my idol. He was not only my best friend. He was also my best teacher. When I was sixteen, I was working in his bingo hall, and I asked him, “Why do you always talk about the competition? There isn’t another bingo hall within 30 minutes of us?” He responded, “Mark when you run a retail business, your competition, is anyone who wants any of your customers time or money.” I haven’t forgotten it, since that day, and you shouldn’t either.
Step 1: Integrate Your Website with your POS
For most retail industries this step seems simple enough, but for the shoe industry, this can be very hard. It’s impossible to have every size of every shoe.
, either have a website that’s not integrated into their POS or don’t have a website at all. If you are one of these shoe stores, I implore you to reconsider. According to a recent study, online shoe sales are projected to see a 9.1% increase in 2020. Meanwhile, Forbes has touted that over two-thirds of millennial shoppers admit their shopping starts online. Finally, according to last week’s post, 71% of Amazon shoppers admit they initially would have bought in store if the retailer had it in stock. Even if you don’t want to sell online, you can make sure your inventory is available online. If you are not sure if your POS integrates with your website, call your POS provider. The numbers are hard to argue with.
Let’s pretend I am interested in the latest “Air Jordan’s,” and it’s the year 2020. Am I more likely to spend 4 hours going to 5 stores on the same day to find them, or am I more likely to Google it and find out that the store 15 miles away has them in stock? That retailer who had their inventory online just won my business even though the one 4 miles away may have had them in stock as well.
Next, let’s pretend I went to the store 15 miles away and they didn’t have them in stock. Their website isn’t integrated with their POS and the quantity available doesn’t update more than once a week. I assure you, unless they are doing something special, I will never go back to this store again. So, what do I mean by something special? I mean offering to special order them for me and have them shipped to my house or call me to come back and pick them up.
Step 2: Complete Quarterly Physical Counts
According to Wikipedia, a Physical Count is a process where a business physically counts its entire inventory. No matter how good your security system, employee-bouncers, or POS are; shrinkage is still possible. Because of this, you’ll want to conduct regular audits of your inventory and adjust the counts in your POS. This way your quantity available is correct. If you don’t have the staff or the time to do this, you can also do Cycle Counts.
Physical Counts have traditionally been the year-end count of all merchandise in all stores. The merchant’s outside accounting firm probably forces this upon them. If not the CPA, then certainly the bank providing the merchant with a line of credit against the value of the shoes will require this.
Cycle Counts are more frequent and typically only count a small portion of the inventory. They are no less accurate, but they are a lot easier to conduct because you are typically counting fewer items.
One of our large shoe store clients, with 16 locations, performs a cycle count on a small portion of the inventory every Sunday. This helps identify any problems before the year-end. At the same time, when conducted properly, by the end of the year every item has been cycling counted at least once resulting in a faster more accurate annual physical count.
If you don’t know how to conduct either one of these, you should call your POS provider (Yep!).
Step 3: Create Good Labeling Practices
This should be a no brainer for most of you as almost all your shoes have a specific vendor. I have yet to see a shoe manufacturer that didn’t have their labels, but just in case I’ll share this story with you. I once had a customer that sold wooden snakes. Do you remember the old toy that wound back and forth? There wasn’t too much to it, but I don’t know many kids that didn’t have or want one from the zoo gift shop. This customer had a plethora of volunteer workers and they all called this toy a different thing. Whenever new ones would arrive, they would look up “wooden snake”, “toy snake” or “snake”, and when it wasn’t there they would “help out” by creating a new item. Besides all of the obvious ways this was wrong, it always led to them being out of antique wooden snakes. This was, in fact, incorrect. They had hundreds of them but they were all under different item codes, all over their warehouse. Some may disagree with me, but I find that allowing your POS to come up with the item name is the best way. I have issues remembering my dog’s birthday (partly because my wife made it up) much less than 100,000 items and their associated item numbers. No matter how you chose to do it just stick to it. Teach your staff about it and never vary from it for as long as you use the same POS.
Step 4: Define and Follow your Returned Items/Damaged Goods Policies
I have been told in the past I have the grace of a baby giraffe. I have to baby proof my house because if I don’t, I will most likely hurt myself. So, I most definitely know that not all of your shrinkage is going to come from theft. You also need to consider damages when talking about shrinkage. But it’s what you do with the damaged shoes that matter. Let’s look at a real example: If a customer returns a pair of shoes you have several options.
1. If they’ve never been worn, your POS can just return it to sellable inventory.
2. If the shoes are worn or damaged, you should have your system or clerk process the return but mark it as Return to Vendor, as many vendors will allow you to return this.
No matter which scenario, the system needs to track it, adjust your sales and taxes, and maybe even track the return in the customer’s file. Make sure your employees know exactly what to do and that they do it every time.
My Two Cents
The most important part of generating revenue in the shoe and apparel business is having the right inventory at the right time. So why do all of that and not go the whole distance? In the shoe industry, you can have customers for life if you do it properly. In next week’s installment, I’ll discuss some low-cost/ high return marketing methods that will help ensure that you do.
I know that by doing just these 4 things you will have a much more accurate online inventory thus increasing your ability to compete with companies like Amazon and everyone else that is getting into shoes today. Just remind yourself every day, when you walk into your store and turn on your light, “Do not go gentle into that good night…rage, rage, at the dying of the light.” AND Remember, 51% of Millennials like the social aspect of shopping, meaning being in a store and learning about your inventory from your staff!
Mark Nelms is a Business Development Manager for Soft Intelligence. He has conducted over 400 interviews with retailers from almost every vertical and size. In prior roles, he’s assisted clients like Cumberland Packaging Corporation (Sweet N’ Low), The New England Patriots, and NCR (National Cash Register.)