By Mr Retail
Many of us have been thinking about inventory, our levels, and if it is time to start unloading it.
Vendors are once again introducing new models. In year’s past it was okay if we had some existing inventory as we would just sell through it. But in head units, more vendors are offering wireless CarPlay and Maestro interfacing at lower retail pricing. So, if you had six months of inventory in a model that sold for $750 and now there’s a comparable model at $600, you get my point.
Vendors are again running deals. I have two head unit vendors that ran “Black Friday” promotions and I couldn’t participate with one vendor as I had lots of inventory from a spring release. This is an example of where I could have lowered my average cost on these units, but had no open to buy available. I had another vendor running a deal and I was able to get in on the deal. In year’s past, I counted on these deals and would buy extra inventory for well into the next year.
In the last two years, you could pretty much count on your inventory only going up in value as time progressed. So while it was sitting there, you were effectively making money. Sort of like a stock market that is trending up. But as we all know, when the stock market trends down, our portfolio loses value. So maybe now is the time to start selling down on inventory.
Cash flow is king in our business. Without it, we go bankrupt. So if cash flow is getting tighter, lowering inventory levels makes sense. If you are flush with cash, then I suggest sticking to the first three points above. More than anything, being smart about inventory is more important than ever as the new normal sets in. I wish you well as you figure this out in your store.
About Mr Retail
Mr Retail offers opinions and information on car audio retailing for CEoutlook. He wishes to remain anonymous. He has owned a retail store in this country for over 20 years now. Mr Retail loves what he does and loves the 12 volt industry and is happy to share his hard won expertise.
