One of the most difficult decisions you will make when starting and operating a small retail store is picking products to sell to your customers. There are a number of factors that you need to consider when making your selections for your inventory. The last thing you want is to choose items that fail to sell, which in turn will jeopardize your store’s sales and profits at the same time.
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When choosing the products to sell in your retail store, there are some questions that you need to ask. Even though subsequent questions can’t keep you from choosing ill-fated products, they will help minimize pricey mistakes.
Will the Product Sell Through Quickly Enough?
It is not sufficient that a product sells; it should sell through swiftly enough to avoid getting stale. Your clients will recognize if the exact same items are located on the shelves every time they come. Many will put off their acquisitions until you mark down the item’s price. Other folks may be dissuaded from buying it altogether.
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Prior to incorporating an item to your inventory, think about how quickly it will sell. It does not have to be bought by all your customers. But there must be adequate desire to move it off your floors without having to resort to expensive markdowns.
Does the Item Provide an Adequate Margin?
Even if a new item sells swiftly, make sure it provides a profit margin that is high enough to deliver a satisfactory profit. For instance, if your store’s standard profit margin is 50 percent, think carefully before carrying a product that offers a 25 percent margin.
The edges you preserve on each and every product you sell will certainly play an essential part in your store’s long-term achievements. Do not compromise them; do almost everything you can to prevent them from erosion.
Who Else is Selling This Stuff?
Unless you operate a specialty retail enterprise in a very small area of interest, you will probably have competitors selling the exact same items carried by your store. Typically, competition is inevitable. But it’s worth discovering how loaded a market is for an item you happen to be considering adding to your inventory. Too much rivalry, particularly from the big-box retailers, can depress product sales.
There are several ways for self-sufficient retailers to outcompete their bigger rivals, but having the same products at increased costs (due to less volume) is not one of them.
Does the Item Complement Your Current Product Categories?
A common mistake committed by small store proprietors is to add new products which have very little in keeping with their areas of focus. For example, a home and garden shop may carry sun glasses; a clothes store may carry jewelry; a hair and beauty supplier may add well-liked films on DVD.
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The intention is usually the exact same: to find a way to increase the company’s sales and profits. But the result is that the shop’s stock gradually loses focus on the areas in which it is an expert; before adding a product to your retail store’s floors, make sure it complements your existing assortments.
Is There a Steady Supply Stream?
A fast-selling, high-margin product that matches the rest of your items may make an ideal addition to your shop; but it is essential that the distributor of the merchandise is trustworthy. If demand is high, and you are unable to rejuvenate your inventory when necessary, your clients may grow to be disappointed, and look somewhere else. If this happens, you could find yourself having a going out of business sale.
Conduct a bit of due diligence prior to committing a part of your stock to a new item. Additionally, start with small acquisitions, and raise the quantity as you gain confidence in the supplier’s ability to meet the demand.
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Running a small retail company involves a number of critical tasks, such as getting to know your customers, hiring and dealing with employees, and marketing your store. Selecting products is another key factor that influences your achievements
The correct selections may satisfy your customers while enhancing your company’s long-term earnings.
For more information on starting a retail store, visit our section on the Retail Business.
About the Author:
The article was written by James Bulger. Learn more about going out of business sales at www.gawrightsales.com