Feeding the beast

If a business is like a living creature, and sales comprise its heartbeat, then inventory is surely the body’s lifeblood. Without inventory, there are no sales, no heartbeat and no business.

Keeping the blood of the business flowing by efficiently stocking and selling inventory is job No. 1 year-round for any independent garden center retailer, but during the spring season, inventory becomes a more complicated matter than simply making enough sales to get by. Retailers must also pay close attention to what is sold, what needs to be restocked and what items are doing well in order to survive the spring.

Consultant Steve Bailey, who works closely with the Garden Center Group and various IGCs around the United States, says that when going into the busiest time of year, garden center retailers do well to keep their inventory closely tied with tallied and expected income. It rarely pays off to bite off more than you can chew with inventory unless you’re confident you can sell it all when spring comes. Bailey says the longer inventory sits, the harder it is to sell.

“Making your inventory and the size of your garden center match your revenues is big,” Bailey says. “Too many garden centers have expanded beyond their revenue need or revenues have retracted and they’ve stayed at the same size. Fresh inventory and turning inventory quickly is the key to good retail. That’s true of all retail, not just garden centers.”

Another major factor in the spring season is the issue of seasonal staffing — most retailers see a boom in the size of their teams through their busy months, and IGCs are no exception. Bailey says keeping an adequate amount of trained seasonal employees makes it much easier to keep the shelves stocked.

“Seasonal staffing is critical, in order to ensure fresh inventory is being restocked on the shelves,” Bailey says. “That’s going to eliminate lost revenues through out-of-stocks. Good management, as far as recognizing the inventory need, is always critical. The main thing with staff is to have staff when you need it, but to not have it when you don’t need it. It’s the same thing with inventory.”

Doing without overdoing

Keeping up with demand can be difficult to balance with the concern of overstocking: you want to give your customers what they want, but you don’t want to get saddled with more inventory than you need. Dennis Fix, owner of FarWest Landscape & Garden Center in Boise, Idaho, says his store regularly makes minimum orders of inventory to minimize risk, due in part to their distance from green goods suppliers.

“We’re far enough away from market — we’re 450 miles from our plant and tree grower — so it’s about a week of turnaround from the time we can order anything to get anything in,” Fix says. “So, we do a lot of minimum orders, just what we need. On a common plant, we might sell 500 of them in a year but we’re only going to order them in blocks of 20. Working with vendors that can delivery weekly is critical to us right now.”

On top of avoiding an overabundance of inventory, Bailey says retailers also need to strike a balance between playing it safe with top sellers and offering new and unfamiliar products that are fresh in the market.

“There are your staples that you know you’re going to sell year-in and year-out,” Bailey says. “There are trendy items that you get in and ride the waves as far as popularity [goes] and just recognize when the popularity is fading and get out of that item before you need to pay people to help you get rid of it. Some items may last two or three years, others may last 10 years, but good management will recognize when that item is fading in popularity. Good buyers will, too.”

Fix says customers in his market are usually open to the unusual, which makes it safer for his store to experiment with the untested products that fall outside its bread-and-butter offerings.

“I think our market just still craves the new and exciting,” Fix says. “We spend a lot of time at markets looking for what is going to be good. We sell a lot less of maybe a common daylily and a lot more of a specialty one. That kind of goes all the way through Echinacea to evergreens, everything. You’re kind of monitoring those numbers all the time. So what worked last year, we’re going to make sure we have back in this year, but we’re also looking for the improved version of that. The target is always moving.”

Follow the data

A crucial tool for effective inventory control is one that may be overlooked by many who take it for granted: the point-of-sales system. POS terminals are used to process nearly every retail transaction in the country, but not every retailer uses their POS systems to review and analyze their sales figures and, in turn, inform their inventory decisions.

POS systems can tell users what sells well, what time of day certain products sell well, what types of products are often purchased alongside others and many more useful insights. Bailey says modern POS systems are the lynch pin to comprehensive inventory control.

“If you want to do any type of inventory control, it’s necessary to have a POS system,” Bailey says. “I do find that most garden centers do have POS systems now, and 15 years ago, they did not. It was probably 50/50 15 years ago, but it’s really essential now. Using your POS system wisely, as a measurement, and not just as a cash register … inputting the inventory into the system and following the inventory back out of the system, gives you that tracking that’s necessary to know where you’re making money and where you’re not.”

From a retailer’s perspective, Fix says the utility of a POS system is essential for knowing what sectors of your stock are working for you.

“The point of sales system really allows you to monitor your inventory,” Fix says. “You have to see what your top 10 products are, what your bottom 10 products are. Without the POS system, you have no idea of any of that information.”

Although the facet of inventory control are numerous, businesses preparing for spring can get a strong start on inventory control by focusing on what they have, what they need and what sells. When retailers recognize what keeps the blood of their business pumping and how much it costs them, they’re off to a respectable start, Bailey says.

“Making money is the key — it’s not what you sell, it’s what you can keep,” Bailey says.