Chris Beer, Managing Director of George and Matilda Eyecare, says a tendency for many practices to over-stock frames is causing unnecessary financial stress and restricting sales opportunities, especially during the current challenging times.
“My insight from 36 years in the industry is that suppliers are often focused on the concept of ‘sell in’, whereas in fact ‘sell out’ is a much more helpful metric.
“Times like now show the practice owner that cash is king and working capital is the life blood of any practice. From experience, a lot of practices have double the stock they need, which on average says they have AU$30–50K worth of capital locked up that is depreciating on a daily basis and burning a hole in their pocket.
“While there is an obvious financial cost, the most important impact is on your customers. If you’re overstocked, you’re not able to bring in new fashion releases and freshness to the practice to create excitement and energy around the product.
“Of all the practices I have acquired, or partnered with over 36 years, no more than a handful have been stocked for the right size. As a guide, you need to run with a stock turn of four, and depending on the size of your practice, this can be a challenge.
- Reviewing the display space and considerreducing what you don’t require,
- Keeping no more than two weeks’ coverstock in the drawers,
- Don’t buy into the drug of ‘sell in’, and
- If your supplier is so confident, let themtake the risk on the stock.
“A good way to bring this into focus is to go into your practice on the weekend when it’s closed and pin a $100 note to each frame you have in the practice. Then, stand back and reflect – is this a meaningful way to use your hard-earned cash?”