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Budgeting for Inventory: Part Two

inventory management

Last week we covered how to budget for inventory with funds you have. (Remember, if your inventory account is empty, don’t buy more inventory!) In part two of our budgeting for inventory series, we cover what inventory to stock and how to avoid supplier marketing schemes.

Buy with your customers in mind

First, know who you’re shopping for. If your client description is as overarching as “knitters” “quilters” or “scrapbookers” you’re not differentiating yourself enough.

Second, think of who your best customers are. A list of clients likely jump to mind, but note, your best customer doesn’t have to be the highest spender. Rather, your best customer can also be the most enthusiastic or a promoter of the store.

Once you have a list of 10-20 shoppers, buy with them in mind. Ask yourself before purchasing any product if it is something your best customers would like. If they won’t like it you shouldn’t buy it.

Finally, try to find a happy-medium when ordering inventory. You don’t want to buy so much product that it overwhelms your top customers, but you also want to have enough to satisfy demand.

Shop smart for inventory

Another thing to keep in mind are marketing campaigns from vendors. Vendors will use tactics to create a sense of urgency, such as “limited supply” or “limited-time-offering.” Remember, you should only purchase inventory if it makes sense for your store and you have enough funds in the account.

Inspiration for this post came from The Not-So-Obvious Basics of Buying by Gwen Bortner published in the October 2022 issue of Creative Quilt Retailer.


If you’re looking for more information to guide you in owning a retail business, subscribe to Creative Quilt Retailer today. Already a subscriber? No worries—join our Facebook group for insights and dialogue from industry specialists like you. And don’t forget, you can always purchase single issues if you prefer that instead.

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Budgeting for Inventory

inventory budgeting

Are you spending money you don’t have for inventory? Continue reading to learn how to avoid this financial situation.

Budgeting

To avoid overspending set aside a portion of every sale in a separate account to be used specifically for inventory. If the account is empty, do not order inventory (even if a calendar reminder is telling you to do so). Once the account has money in it, the first thing to cover are orders placed but not yet paid.

To determine how much of each sale to set aside, check last year’s cost of physical goods. Then compare that as a percentage of your total sales. If you can’t find this information, anywhere from 40% to 45% is a good place to start.

Note, this account is for inventory only, not classes. As you use this system ensure the account has enough funds for basic products, as they are the backbone of your inventory.

Inventory Scheduling

Another piece of inventory is when the product arrives. The first thing to avoid is feast or famine, meaning you don’t want all of your product to arrive the same day. That means you won’t have anything new to stock your shelves with for the next three months.

To avoid this, inventory tracking is essential. Once you know how long it takes a product to ship, you have the option to contact the vendor to deliver when you need it. Most vendors are flexible on delivery dates after payment, as the sale is what matters most to them.

The other option is to cut your order. If you know the order isn’t arriving for two more months, take a look at the list and determine what you can do without.

Inspiration for this post came from The Not-So-Obvious Basics of Buying by Gwen Bortner published in the October 2022 issue of Creative Quilt Retailer.


If you’re looking for more information to guide you in owning a retail business, subscribe to Creative Quilt Retailer today. Already a subscriber? No worries—join our Facebook group for insights and dialogue from industry specialists like you. And don’t forget, you can always purchase single issues if you prefer that instead.

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Retail Merchandising

merchandising

Psychology plays a huge role in retail merchandising. Read on for ways to display your merchandise to turn inventory faster.

Simple tricks

There are many ways to arrange your merchandise to increase sales, but let’s start with the 2-finger rule. Simply put, there should be a two finger space in between your product and the top of the shelf. This both maximizes your shelf space as well as presents the product logically to customers.

Speaking of shelves, most people scan shelves in a Z when looking. Customers also compare products horizontally.

It goes without saying, but try not to place heavy products on higher shelves. 15% of people didn’t buy an item because it was too heavy when moving it.

Finally, consider rotating products. Moving an item from the bottom shelf to eye-level increased sales by 87 percent.

Color merchandising

Color obviously plays a role too. Check out the list below to encourage different feelings:

  • Blue: Promotes peace and tranquility
  • Green: Encourages freshness and nature
  • Purple: Equates to spirituality
  • Yellow: Spreads energy and happiness
  • Pink: Makes people romantic
  • White: Creates a simple and clean atmosphere

There are hundreds of tips that I’m sure we didn’t cover. What have you learned in your career you can share with the quilt retailer community? Comment on this blog for merchandising tips that have worked for you.


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. And don’t forget, you can always purchase single issues if you prefer that instead.

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Optimize Your Website

websites

Businesses should leave an impression. These days, most first-impressions are made by websites. Read on to discover how you can optimize this essential online-tool.

Websites: Where to start

Making a website is just like making a quilt — it can be as simple or as complex as you want it to be.

The first place to start is by choosing a partner that understands your business. For example, some software providers have solutions for assembling kits, fractional yards and fat quarters that can integrate into inventory management processes.

These same software providers can also add other tools including classes and block of the month subscriptions.

Website goals

The next step is to decide what sort of goals you have for your website.

From the above, increasing productivity is an obvious goal. You can go one-step further and tie in back-end business systems to your site as well. Further, you can make changes in one place and it will automatically update your website and in-store system.

It goes without saying, but your website should also help in two large ways: increase sales and drive foot traffic. To accomplish both of these, you’ll need to inform customers of your products and services, as well as determine how each section of your website will increase revenue. We’ll touch on both of those next week.

Inspiration for this post came from “Increase Your Website’s Value” by Brad Tanner of Rain Retail Software and was published in the April 2022 issue of American Quilt Retailer.


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. And don’t forget, you can always purchase single issues if you prefer that instead.

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Jazz Up Your Fabric Displays

fabric display

In honor of the upcoming AQR Academy workshop on April 7 – “Jazz Up Your Fabric Displays!” – we’re covering how to display one of the best parts of owning a quilt store: the fabric!

Fabric Focal Point

When you walk into any fabric store what is the first thing you notice? The fabric bolt of course! They’re the most prominent fixture in any quilt shop. One way to get shoppers through your store is to stock a bolt on the rear wall.

And speaking of stock – how exactly should you fill said fabric bolt? You can create the illusion that you have more selection in your store if you group similar merchandise together – compared to scattering it throughout the store. Customers not only are more likely to notice these groups, but they’ll also be attracted to the color schemes they like.

Take advantage of the vertical shelves on your bolt by hanging sample projects, fat quarter bundles, or patterns (think of what grocery stores do). Quality over quantity is important as you want to create inspiration the shopper wouldn’t have seen if they were shopping online.

The Display

Outside of the fabric bolt, what else increases sales? The reality is, customers love to touch fabric. Folded merchandise on a table turns faster than merchandise that is hung. Merchandise that is hung however is typically better maintained, so consider that when you’re setting up your display.

Inspiration for this post came from “Strike the Right Note,” by Anna Woodward published in the February 2022 issue of American Quilt Retailer.


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. And don’t forget, you can always purchase single issues if you prefer that instead.

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AQR Academy Upcoming Events

Upcoming AQR Academy

There’s a lot going on at American Quilt Retailer, so we wanted to set the record straight. Check out the details below for all upcoming AQR Academy events.

Upcoming March AQR Academy Workshop

To kick things off, our next AQR Academy workshop is taking place next Wednesday, March 9 from 4:00 – 5:30 p.m. CST. Registration costs $45, and the topic is inventory and how to get it right.

Speaking of registration, there’s still time to take advantage of our discounted AQR Academy All Access Membership. You’ll save $120 and get access to all of 2022’s 90 minute workshops plus bonus information not included in the magazine. Registration is open until March 31.

AQR Academy The Buzz – Spring Fling ’22

AQR Academy is hosting an all day event on Saturday, April 9. We’re calling it The Buzz and it’s our Spring Fling kick off!

Can’t attend the whole day? No problem; join live for what you can and have access to recordings after the event. Note door prizes are still available.

AQR Academy Live

Last but not least, we’re hosting our first-ever AQR Academy Live. Register to attend in-person April 19 – 22 in Pleasant Hill, Iowa.

Editor of American Quilt Retailer Heidi Kaisand will be joined with three days worth of guests for learning and networking opportunities we haven’t been able to experience for several years.

Head to the event page for details on room reservations, the event schedule, and what meals are included in your registration fee.

If you can’t tell, we’re excited for the world to open up again and we hope you are too!


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. And don’t forget, you can always purchase single issues if you prefer that instead.

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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.


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.

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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.


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.

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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.