I have a favorite saying from the immortal Matt Ross. Matt had a ton of Mattisms that I loved to repeat to him and anyone who wanted or was paid to listen to me. Matt became a star up north for me when he joined our team after a storied career at Southern California electrical retailer and premier members-only store, FEDCO. For those too young to remember or not from here, FEDCO had it all. Imagine a target in Moscow before perestroika. They had everything you could want in a dull, bland, lifeless environment that could bring Bobby Mcferrin to his knees in despondency. Matt was in operations and I mostly sat on the three-legged stool of sales, merchandise, and marketing, so we worked together a lot. Matt had skills. He could see all my biggest furniture fears with almost Stasi-like insight and feed off of them. He could tell where we were over-matched or under-matched and the many dogs I brought. He was much older than me, and he always got to work long before me; even if I arrived before sunrise he would be there to tell me how good it was for me to show up before closing time. Matt was everywhere, knew everything, and he let me know with a wink and a cute, wry smile. He was epic.
One morning I walked in and he was waiting for me, sitting on the worst-selling couch on the floor. It was truly an abomination, and I cursed myself for buying it; but how did he know? “Don’t worry, kid…. doctors bury their mistakes and retailers just write them down.”
Wise words indeed.
A blunder from time to time is understandable. Bad buys happen, and there’s no point in getting emotional about it. No one is immune. It’s a bit like a good martini. One or two are easy to laugh at, but when you order martinis everywhere you go, you end up with a messy house and an angry family life. We don’t want that.
I’ve seen more than one seemingly good retailer crash and burn by mismanaging inventory, and that was in the days of predictability. You knew that if you ordered something with a 60 day lead time, it would ship within the specified time and the freight rate would be about what you expected. Ah, the good old days. Managing the ebbs and flows of shipping schedules and timing with demand is a dangerous balancing act. DUH! Thank you, Captain Obvious. But the show must go on, the doors must open and we must have things to deliver. Matt Ross would tell you what I lacked in buying discipline, which I made up for through calculated strategy and contingencies. I was passionate about my salespeople who trusted me to have products in stock to deliver so they could feed their families. Managing inventory dollars was the heart of the business.
Every business is different, and each of you has your own concerns and KPIs that you hang your hat on, so bear with me if that sounds a bit JV to you. These were my mantras.
- Look at this graveyard. New furniture in a box doesn’t tell tales, but broken, overturned, and faulty items might paralyze you with fear if they could talk. This is a huge black hole in all hard goods operations. My source of nausea was from the warehouse graveyard. Looking at him made my stomach turn. I could hear my dad, in his Brooklyn accent, reminding me that everything inside the walls was made up of dollar bills and you couldn’t lose control. Watch this graveyard like a hawk.
- A dominant retailer in my area taught me a lot. The first thing is that even if something I showed the sales team was full of adjectives, they had to stay disciplined with their strategy. I showed them hip, cool, unique, trendy, radiant, proven winners, but if the way business is done doesn’t fit between companies, forget it. There were too many ways to do things, and it wasn’t worth the variation in inefficiencies caused. Round pegs never go through a square hole.
- Celebrate creativity by selling the losers. Have a plan for excess inventory when managing inventory. You know they are coming. GMROI is nothing to hang your hat on anymore, so if you need to take control of the circulation of your own commodities, then look at it in a mathematical way. In baseball, it’s called the Mendoza line. Try to make three buckets. One bucket is for winners, one for tweens, and one for losers. The winners are rearranged and you can never have too many. Think of tweens as excuses you can’t find anymore. You will find that this bucket contains the product you fell in love with at a furniture market, but never sold. Never fall in love with furniture – it’s too expensive.
- Responsible for sales management to sell losers and celebrate when they do. It’s merchandising’s fault, but the sales team is sticking to it. Furniture needs a village to succeed, and we all need to be confident that everyone is doing their best to further the cause. If you’re in sales, laugh at this floral, ball and claw print arm sofa that’s been waiting for Great Aunt Tootie to jump up and down, but do your best to pull it off. Good buyers expect to laugh; it goes with the territory.
- If at first it does not succeed, move it. Every building I’ve ever had was plagued with a few black holes. No matter what you put in them, the items would die a slow death. I checked this by changing a dead group with a hot seller from the bucket one, and I bet you can guess what happened. Winners are hard to find, so don’t give up on losers too soon. There’s a reason you bought it, so give it a chance to prove you right. A batter gets three strikes; furniture receives two.
- Number of cycles. It’s a constant battle to count the floors each week and dig beyond the stats to find out why the stats are happening. The small details are what would keep me awake at night. Like an actor on stage, the costume has to be just right for the performance to resonate. The elements to critically examine are:
- Price tags are clean, correct and up-to-date. Old labels are off-putting, so change them to make the item look new and trendy.
- Lighting is uniform and correctly oriented. Don’t forget them when you reset the floor.
- Accessories fit in well with the group. Obviously, you can’t always take props that were on the board that previously existed into a space occupied by a new group. Set a standard for each group so you can sell the whole piece and inspire a purchase.
- Floor can be wiped out very slowly and torn apart, and a neglected floor sends a clear message that you don’t care. I know it’s expensive, and someone might think duct tape fixes everything, but I’m here to tell you that it makes things worse. Remember, we’re here to inspire, and no one would glue their home rug together if it tore. Clean your carpets regularly. Stains and stains should take your appetite away. Be proud of your presentation and critique it. If you can’t, ask your friends or family to be brutally honest about what you’re doing. Hire a designer to refer clients to for feedback and write them a check for their time to keep the relationship professional.
Take the above with a grain of salt. These were my rules that I did my best to live by. I’ve never been perfect and emotions have a strong pulling power, but the stakes are very high. A few wrong moves could turn off your lights. As a merchant, I was guilty of hanging on too long, but I rarely found enough ammo to prove it right. There are too many great products out there to have a sordid affair with a living room set that you were sure would be a big seller. When it comes to inventory management, take the hit early, empty the stock, and come back to fight another day. After all, this puzzle is what keeps the fire in my belly burning and bright, and it’s what got me to the office before anyone else – except Matt.
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