How to review and optimise stock performance

To effectively manage your business, you must regularly use your sales data to sort your products into winners and losers. By identifying your best-selling items, you can ensure they are always in stock, while finding slow-moving products allows you to discount them and free up valuable cash and shelf space. This process is the key to improving profitability and keeping your inventory fresh.

Step 1: Identify Your Best and Worst Sellers

The first step is to dive into your sales data. If you use an Electronic Point of Sale (EPOS) system or an e-commerce platform, this information is usually just a few clicks away. Run a sales report for the last 30 to 90 days.

• Best-Sellers: Look for items that sell in high volumes or have the best profit margins. These are the products that your customers love and that make you the most money. They are the lifeblood of your business.
• Slow-Movers (or 'Dead Stock'): Identify products that have sold very few units, or none at all, over the last 90 days. This stock is tying up your money, costing you storage space, and could be replaced by something that sells much faster.

Step 2: Take Action Based on the Data

Once you've categorised your stock, it's time to make some decisions. Your goal is to maximise the performance of both groups.

For Your Best-Sellers:

1. Never Run Out: Ensure you have a solid reordering process to keep these items in stock. Running out of a popular product means lost sales and disappointed customers.
2. Promote Them: Give your best-sellers pride of place in your shop or on your website's homepage. Customers are already looking for them, so make them easy to find.
3. Consider Variations: Could you offer your best-selling product in a different colour, size, or style? This is a great way to expand your range with a proven winner.

For Your Slow-Movers:

1. Discount Strategically: A simple price reduction is the most common way to shift slow stock. Start with a modest discount (e.g., 25% off) and increase it if needed.
2. Create a Bundle: Pair a slow-moving item with a best-seller as a special deal (e.g., "Buy X, get Y half price"). This can introduce customers to a product they might not have tried otherwise.
3. Use as a Freebie: For items that simply won't sell, consider using them as a 'free gift with purchase' for orders over a certain value. This clears the stock and can encourage larger orders.

Step 3: Review Your Suppliers

Finally, look at where your products are coming from. Your sales data can also reveal which suppliers are providing your most profitable items.

• Check Profit Margins: Are some suppliers providing you with better margins than others?
• Negotiate Terms: If you are a regular, reliable customer, don't be afraid to ask your suppliers for better pricing or payment terms.
• Reliability is Key: A supplier who always delivers on time is incredibly valuable. Factor reliability into your assessment, not just price.

Top Tip: Make this review a regular habit. Set aside time once a month or once a quarter to go through this process. Don't get sentimental about stock – if it isn't selling, it's a liability, not an asset.