Inventory management is more complicated and varies from program to program. For example, STX software breaks down retail sales into four percentage categories, listing products that account for 60 percent, 20 percent, 15 percent and 5 percent of total retail sales. Maple sees too many salons ordering extra inventory in the last category, even though those products account for such a small piece of the pie. Until Maple runs the reports for salon owners, they typically have no idea they’re tying up their money in slow-moving items. Meanwhile, all of the older products are losing potency on the shelf and often baking in the sunlit window.
“It’s the old 80/20 rule,” he says. “Usually 20 percent of your products are generating 80 percent of your money. You should be basing your minimum quantities on sales history. Otherwise it’s just haphazard.”
Pagliano explains that a good way to forecast what will sell best in your salon in the next two weeks is simply by looking at what sold best in the past two weeks. Milano Retail Software calculates any change in the period that you designate and automatically recommends quantities based on the product’s “growth factor.”
Newer software programs focus on the other end of the spectrum, too, helping you identify your poor sellers. For example, Harms offers the Slow-Moving Inventory Wizard. If looking at the numbers convinces you to drop the product altogether, with a push of the button you can ask the “Wizard” to price the item at a discount and, eventually, faze it out.
Responding to a user request, Harms recently added a program that monitors how many people bought an item once, how many twice and so forth,” Scudder explains. Those figures can help you plan a promotion or determine whether people who use the product once are likely to purchase it again. >
In addition to addressing the decision-making and strategy, software can aid in the mechanics of ordering the products. Milano’s program sets up an SKU code list identical to the distributor’s list.
“The systems can talk to each other,” explains Pagliaro. “The product number is the same; there’s little room for error and salons start off with accurate inventory and coding. Then the salons place their orders electronically, leaving the distributor’s sales consultant plenty of time to truly consult and educate instead of spending all of his time in the salon writing up the order.”
Elite Software further relieves distributor sales people of having to inform owners of price hikes, because it compares the previous cost of product with the current cost. “Owners don’t have to go through invoices to figure out that the price has gone up,” notes Brad Mace, sales manager of the company’s Salon & Spa Management software.