PBA :: Progress :: Winter2006 :: Stores and Inventory Control
Stores and Inventory Control
Wayne Taylor, Maly's Store Director
PBA distributor members often cite Maly's of California, under the leadership of President John Maly, as a pace setter and innovator for professional beauty distribution. Maly's agreed to share some insight into their well-respected store and sales departments for this edition of PBA Progress. Be sure to check out the related article, "The Maly's Way".
When it comes to inventory control in professional beauty stores, there's good news and bad news. The bad news is that you have to keep track of the product movement and inventory level of the items in your store. The good news is that this is a relatively easy process because of software that presents the data in easy-to-read reports. It's also relatively easy because of two principles that every store operator should be aware of:
The "80/20" Principle: This is a common principle in all businesses that tells you that 20% of your products will generate 80% of your sales and profits. This is true whether the product is beans, rice, tires... or shampoo. This principle makes the process of tracking inventory easier because it allows you to focus your time and energy on the top 20% of the items in the store.
The "Star" Principle: "Stars" are the high volume, high growth items that comprise most of your top sellers. The basic principle here is that you should identify the top moving items in your store and make a commitment not to run out of the stars.
Your store isn't big enough, and you don't have enough capital to ensure that you will never have an out-of-stock. But not all out-of-stocks are created equal. It is one thing to be out of an accessory item, like a processing cap, and quite another to be out of the client's favorite shade of color. Focusing on the star products is relatively easy and ensures that you never disappoint your customers with out-of-stocks on key items.
Another key factor to understand in-store inventory control is that the vast majority of items in the store are slow moving (the "80%" in the 80/20 principle discussed above). And good inventory management involves identifying your stores "dogs"-items of extremely slow sales. At Maly's we define dogs as those items with no movement in the last 90 days. You may refine your definition of dogs, but the important point is that you do identify the slow movers-and that you have a process to get these items out of your store's assortment.
