Selling Footwear: Gaining a Foothold
Here are some tips to help keep your shoe sales moving forward.
Managing inventory is always a balancing act. If you don’t have enough, you’ll miss sales. If you have too much, you won’t make a return on your investment.
In my years of tennis retail, footwear was the most difficult category to manage. Like other categories you have to decide what will sell, what price points need to be covered and all the usual things that enter into buying decisions. But then it gets even more complicated because there are sizes to consider — lots of sizes. So do you carry full size runs? Only “meat” sizes? Men’s and women’s? Colors? It can get pretty crazy!
But this system may make the task a bit more bearable and hopefully lead to a better sell-through and return on your investment.
Like any buying decision, you must know your sales history, your customers and your marketplace to make a good decision. Be careful when establishing your “open to buy” budget. If you buy your inventory based strictly on your current sales, your business will never grow. In order to increase your sales, you’ll need to have an inventory to support the growth.
Of course, just because you buy more doesn’t mean you will sell more and this is where things get a bit more complicated still. If your numbers are based on realistic sales goals and you take a methodical approach, you should be successful. Here are things you should consider:
Who is buying? Men, women, juniors — you should know the percentage breakdown so that you can skew your inventory accordingly. You need to not only divide it out on dollar volume but also by pairs sold. Looking closely at your stats may reveal that while the dollar amounts may be close to the same for men and women, the actual “pairs sold” may be much higher for one. If so, the cost per pair will vary greatly and should also be considered. Knowing this information will help tailor your inventory to meet the needs of your customers and make sure that you have on hand what is selling through.
If your sales are really unbalanced in gender, then you may need to take a look at why. If men’s shoes are out-selling women two to one, or vice-versa, is there a logical reason? Is it something you can correct? Just by increasing the deficit, you will see a big jump in sales and return on your investment. Is your inventory and selection equal to both men and women? If so, you may need to adjust your selection to increase sales. Look at price points, styles and colors first. Men and women are very different shoppers, so you’ll need to adjust accordingly.
Are you missing sales because you are out of sizes or don’t have a color or style? Listen to your customers! While you can’t stock everything for everyone, you can tailor your inventory to get those sales you have been missing.
Generally, you will want to have a variety of price points, but you’ll want to skew that to your customers. You may have customers who want the latest and greatest every season and are willing to pay top dollar to get it. You will probably also have customers who want the best bargain they can get. While you want to satisfy everyone, knowing what price points are selling will help you have the best inventory to meet the demands of your customers.
With easy access to “price comparisons” these days, you must consider that when pricing your shoes. Your customer may be willing to pay a bit more for convenience and the ability to try on there in the store, but if they can save a significant amount by ordering elsewhere, they usually will. Assess your customers and skew your price range to them.
If the majority is looking for a high-quality, technical shoe then invest the majority of your money there. If most are looking for a bargain, you may want to look at closeouts and deals from your vendors to make sure you are well covered. Depending on your sales volume, most vendors have programs that reward volume purchases. If you are not large enough to buy large volumes from every vendor, you may want to stock the majority of your inventory with one brand in order to get the best pricing.
Be careful though to not sacrifice selection to save a few points on your margins. If you spend a little more to have a bigger selection, it may pay dividends beyond what you would have saved by increasing overall sales.
Deep and Wide
Inventory jargon refers to how many of one item to stock as how “deep.” Your top-selling shoes should be stocked deep to ensure that sales are not missed because you ran out of a size. The “wide” refers to how many SKUs you stock. Having a wide selection can be impressive but it can also be confusing to the customers if they have too many to choose from. Of course, having a wide selection also ties up a lot of inventory dollars.
There are many reasons to be judicious in choosing the selection to offer. Having an overwhelming selection can have other drawbacks such as the customer who insists on trying on every single pair. Even if they end up making a purchase, your staff may have spent hours to complete the sale. This is not a good return on your investment.
Generally, you want your inventory to go only as wide as necessary to get the job done. Carry enough selections to offer the variety of price points, features and styles/colors you think is necessary to achieve your sales goals. You want your inventory deep enough so that missing sales due to out-of-stock situations are rare, but you also don’t want inventory sitting on the shelf too long either. Go deep enough to stay in stock on your best sellers.
On new models that don’t have a track record, start out with a minimal inventory in the “meat sizes” (the most common sizes). If you see a lot of interest, you can always increase your inventory numbers. On the other hand, if you are deep on a model that sales have really fallen off or never materialized as you had thought, mark them down and get rid of them! You will never make money with them sitting on the shelf. Do whatever it takes to get them out the door so that you can reinvest that money in a better seller.
Inventory “turns” are the number of times you turn the entire inventory each year. If your shoe inventory is $25,000 and your cost of goods is 50 percent, annual sales of $100,000 in shoes would be two turns. The number of turns and your cost of goods will ultimately determine your return on investment. While this number varies widely, my goal was a turn of two in shoes.
After many years of experience and growing the business large enough to qualify for deeper discounts, along with figuring out what sizes and styles were in demand by my customers, we were able to get turns closer to three. Achieving a good turn on any inventory is a combination of buying at the best price, stocking products that sell through as quickly as possible and managing your inventory numbers.
Higher turns on the inventory will mean sales increases, better margins and result in a good return on your investment, which will increase your bottom line.
See all articles by Bob Patterson
About the Author
Bob Patterson , the founder of the RacquetMAXX customization service, is a Master Racquet Technician with more than 20 years of experience. He was RSI's Stringer of the Year in 2005. He is Executive Director for the U.S. Racquet Stringers Association.
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