Sourcing the right inventory for your retail store is as much an art as it is a science.
According to Storenvy, sales success requires offering the right product in the right place at the right time and for the right customer. Basically, this means that, as a retailer, you should source the products your customer actually wants.
In general, a retailer can increase the number of buying customers by increasing and improving the product selection.
However, there have been as many successful examples of adjustments to a product selection in the history of retail, as there have been unsuccessful ones.
For retailers, it is relatively easy to spot winners in their product range. It is also relatively easy to identify products that are lagging, but it is more difficult to understand how these ‘laggers’ should be replaced or improved upon.
Selecting the product a customer really wants is easier said than done, so in this article, we’ll discuss a couple of things to consider when deciding what product might be a right fit with your retail store.
Here are the things to consider when deciding if a product is the right fit for your (retail) store:
Quality
Everybody likes great quality items, but not everybody likes their price tags.
This is where the perceived value of a product comes into play, with respect to ‘value for money’. So you don’t necessarily have to focus only on selling low-cost items, but you’ll benefit from a clear understanding of the value proposition of your product in relation to its retail price and some of the aspects we mention down below.
Diversity (of products)
The same principle applies to your overall product range and its diversity. You’ll probably want to start out by selecting a few, consistent, fast-selling items but you will probably also benefit by expanding your range and thus attract a wider range of potential buyers.
Try to mix your range in terms of overall attractiveness and profitability!
Appeal to a majority of potential customers
You can’t satisfy every customer coming into your store, but when selecting the product range for your store, you must have confidence that it will serve the majority of potential customers.
If you make the wrong choice here and select products that don’t meet this vital aspect, you’ll be fighting an uphill battle every single day.
Presentability of the product
Product presentation should be as clear and concise as possible, so your customers have a clear understanding of what they can choose and how it can benefit them.
Also, the design should be supportive of the product and if possible, pleasing to the eyes. If you notice any misunderstandings, it could well be that the packaging of the product is lacking and that it can be improved upon.
Also consider the possibility of white labelling your products, if this is an option your supplier could provide. If you are committed to starting a durable, professional relationship with a supplier, chances are they are more willing to sell you white label products.
Exclusivity
Can customers buy your products only through your store or can they easily find them at other places too?
Exclusivity does not have to be a deciding factor, but it can surely help boost sales if you can make such arrangements with your supplier.
Markup or profit margin
There are probably a lot of reasons to include some products in your store, but you better evaluate their profit margins regularly.
At the end of the day, you have a business to run, in an industry that’s already relatively competitive with fast-moving developments.
Try to find a healthy, average profit margin for your product range and compare your individual products against this margin. If you see that there is just too little margin to begin with, make the wise decision to discard that product from your inventory.
Take overhead costs into account
In addition to calculating a healthy profit margin, you should also have a very clear picture of your overhead costs, which will come into play when calculating the overall profitability of your business. Don’t forget to include these costs in the average margin you actually have to make on a single product.
Consistent performers
Let’s say you have found a high selling item with more than a generous profit margin, but you only sell them once or twice a month.
Of course, depending on the total profit, this might work out but chances are, you are just not selling enough of them to justify their place on your store’s shelf. So go for consistent performers instead, where you actually have solid confidence in their ability to sell and sell again.
Consider consumables, perishables and product life cycles
Consumables are products that have a limited life span and shelf life. If they are not sold soon enough, you won’t be able to sell those items anymore.
Typical examples of this category are groceries, food-related items, and other ‘perishables’. You should make an analysis of their profitability compared against their average time in stock and associated costs. This will of course also vary heavily per industry.
In general, you’ll want to have a clear image of your product life cycle so you’ll know when your potential customer should replace its purchase with a new one.
Choose preferably a product with a recurring sales value
Not all products are created equally and therefore, not all products have the same recurring sales value.
Let’s consider car tires as an example, a product type that maybe falls into the broad category of items that need to be replaced once in a while, and therefore have recurring sales value. However, they don’t need to be replaced as much as cleaning aids for example rubber gloves and household gloves, that we produce here at Nastah.
Calculating the proper recurring sales value for potential products can surprise you. The results will help you find the right products with the most durable recurring sales value.
Understand the power of market research
Market research in itself is another form of art and science, to which we can dedicate another, separate article.
However, for now, we want to point out that if you would like to know more about the best possible product range for your store, you need to know more about your customers.
This requires a deep understanding of their (buyer) persona and what problems they are looking to solve. Try to match products to these problems and you have taken a major step towards profitability.
At Nastah, we are partnering with a broad variety of international retailers and we have seen them spend a great deal of time and effort on market research and the right product selection. Of course, we have done quite a bit ourselves within the gloves industry!
Conclusion
If you are a retailer and are on the lookout for a reliable gloves supplier to build a durable, long-lasting relationship with, be sure to check out our own product range, and do not hesitate to contact us.
We love working with partners and are committed to taking your product range to the next level.
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