What Should We Sell?
Deciding what and what not to sell may be the biggest factor in determining an independent dealers’ profitability and long term success.
Surveys regularly show that the number one reason customers drive to your store is because they believe you have what they need. Yet today customers can sit on their couch and find pretty much anything they need online. As a dealer you need to work extra hard to fill their need when they walk through your door otherwise there’s a good chance they won’t be back.
The right answer to “What should we sell” is different for every dealer and depends on many factors. These include size of market, competition, personal passions, margin potential, space constraints, available expertise, local architecture, household incomes, existing customers, accessibility and more.
Dealers in smaller communities often need to sell a broader range of product than those in larger communities. This seems counter intuitive but in small communities, even 100% market share in limited categories won’t generate enough sales to keep the business viable. Some of these stores need to compete in more categories than much bigger stores in larger markets just to survive.
I regularly see lumber yards in small communities get into the hardware business to generate more sales. This is hardly a new trend. Unfortunately, these dealers often decide to delegate decisions about what to sell in their front end to their vendors or distributors. They succumb to the lure of Program Buys which look pretty and fill the space with no thought, analysis or hard work required.
I recently visited a newly merchandised store in a small town. They had a beautiful display of switch plate covers. Every imaginable shape and colour. The display was 8’ wide and 7’ tall. Holy crap!! The next aisle featured a display of gate hardware. …. multiple sizes and colours. I’ve never seen displays of these products even remotely this broad at Lowes or Home Depot.
Pre-set programs of products give vendors the opportunity to maximize their own sales. By putting in a full program rather than the 20% of products that represent 80% of the sales, the vendor mathematically generates 25% more sales. In many categories even the 25% is overstated since without those extra choices the customer would have been quite satisfied choosing from the more popular colours and sizes. The problem for the dealer is the full program may take up twice the space or more! This kills the opportunity to display more categories or more product lines within the category.
Take control of your store and make conscious choices of what you will sell and why. If your primary business is lumber and building materials start with the hardware needed to install these products. By better satisfying customers already in your store you will attract more of this type of customer and make your existing customers even more loyal. You will sell more LBM products on top of your incremental hardware sales.
If space permits, add in the rough-in products such as plumbing and electrical making sure you have enough depth and breadth of product that customers won’t be forced to go elsewhere for some of the basic components. Here it’s important to find a vendor who understands local codes and can service these categories regularly to ensure products turn efficiently. The next priority is to devote some space to displays of the broad range of building materials available through your store.
Once these basics are satisfied the factors listed above come into play in deciding what else to sell. Once you’re happy with your assortment, use your POS system to generate item movement reports to identify items that haven’t sold in the past 365 days. Clear them out and purge them from your system. Then fill the hole with another product and if you have enough holes consider adding another category that your customers will appreciate.
Burlington Merchandising & Fixtures provides innovative merchandising solutions to both retailers and vendors with a focus on driving sales and profitability. Contact us today to get started!
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