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The Art of the Pivot

The Art of the Pivot

This year has been full of pivots. As business owners, we are constantly pivoting to changes large and small. What’s different about this year is that some of the changes we’ve made ended up being permanent.

Re-evaluate your goals

With some of these more-permanent changes, it’s a good idea to re-evaluate your business goals. Has new customer retention fallen or remained the same as last year? Don’t look at this like a con, rather take the opportunity to invest more time and energy in the customer base you already have.

Do you feel like you’ve spent all year focusing on short term goals instead of mid-to-long range goals? If you feel this way, you’re not alone. It’s ok to continue responding to you ever-changing short term goals until things feel stable again.

Change marketing

Part of the business shift this year is redirecting your marketing to mainly online efforts. Since we’ve had to remain at home people have been spending much more time online. This is a great way to reach your audience—find out where they are (Facebook? Twitter? Tik Tok?) and spend your marketing budget there.

Pivot from the sale

Selling to someone who recently lost their job or continuing your sales operations as if everything were normal is insensitive. Instead, practice empathy and let your customer base know what you’ve been doing to respond to the health crisis, as well as share that you know what they’re going through. This can mean changing your inventory to include more of what they need (supplies to make face masks) and less of what used to be a trend the same time last year (ribbon wreaths).

As we mentioned earlier, business owners are constantly pivoting to respond to market needs. Why should this pivot be any different?

Inspiration for this post came from “The Art of Pivoting” by Sommer Leigh published in the October 2020 issue of American Quilt Retailer.


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Managing Markdowns

Markdowns

Hesitant to markdown your products? Check out these best practices to know when and why you should mark those prices down.

Rule of thumb

The second sales drop on a product is the exact time you should lower its price. Customers vote on your products early, but will often wait until a better price becomes available. That’s why the timing of the first markdown is critical. Luckily, this first markdown can also have the smallest change in price (since customers will already have their eyes on it).

If markdowns are difficult for your business because you have an emotional attachment to the product, try viewing products as a pile of cash. That can help turn a subjective opinion into something more objective and help your profit margins.

Timing

Timing is another important factor. Some businesses markdown products at 60, 90, and 120 day increments.

Another way to look at markdown timing is with seasonal products. For instance, Halloween decorations aren’t full price at Christmas time. On the same page, marking down Halloween decorations for the first time a week before the holiday is just as wasteful. Customers will get better deals at other stores and this line of thought will hurt your return.

Managing inventory

Markdowns and inventory turnover are directly correlated. A lower inventory turnover means more markdowns. This helps to keep new, fresh, and better looking products in your store.

Placement

Items on sale should be placed at the front of your store, and items on clearance should be at the back. This doesn’t mean that the displays should be sloppy, though the same amount of time and care should be placed on all of your products.

What is your store’s policy for marking down products? Comment your best practices below.


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What’s in stock?

Inventory management. What a scary phrase, right? And when spoken as a task it can sound even worse.

But all business owners know how important inventory management can be. How is anyone supposed to know how much of a new product a business should order? Being small business owners makes these processes a little harder when time is already thin.

For those of you who don’t know, inventory management is the process of tracking assets and stock items. Inventory management follows the flow of goods from the moment you order product from a manufacturer to delivery to your local store and finally to the point of sale.

The goal is to keep as good of records as possible for each new and returned item in your store.

Inventory management

Building your own excel sheet is a good start for keeping track of your inventory. Another way to make the numbers more personal is by including the cost of the inventory in the spreadsheet as well.

Stock review is an important manual step in the inventory management process; simply analyze what’s on hand versus what you will need in the future. Of course you can always order product for a customer if they request it; but isn’t it handy for both of you when it’s already in supply?

Another plus of inventory management is that the process forces you to keep records; be sure to review these records once a year to know your best selling products during certain seasons. This can also help with new product predictions too. Keep in mind the ABC system when you’re doing this to keep you focused and organized, where

  • A equals high-value, low quantity goods,
  • B equals moderate value, moderate quantity goods, and
  • C equals low value, high quantity goods.

There are systems in place now to help with the financial side of inventory as well. Since each business owner has their own personal preference, I recommend this article that may help you make the best decision for yourself on what system to purchase.

Once you get this system in place, it can help you determine your reorder point and the amount of stock you want to keep on hand. Knowledge is power, and the more quality data you have on your inventory can save you time and money.


If you’re looking for more information to guide you in owning a retail business, subscribe to American Quilt Retailer today. Already a subscriber? No worries—join our Facebook group for insights and dialogue from industry specialists like you.