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Inventory Control: Strategic Focus, More Sales

Frank Gambuzza | September 6, 2012 | 9:55 AM

Inventory Control: Strategic Focus, More SalesThe fundamental mistake that many salon owners make when it comes to retail is they assume the more inventory they carry, the more they will sell. But too often, they select new product lines based on emotion rather than a strategic process, and they end up with multiple brands that essentially target the same consumer or products that are duplications of one another.

Over time, as they take on new lines, they might cherry pick products of old lines to hold onto because they are favorites of staff or clients, and eventually they end up with a random mess on the shelf that doesn’t make sense. When strategy doesn’t guide line selection, then in the void what often happens is cliques of people who are “into” a brand will develop, and they will shape the personality of the salon. So the culture of the salon is shaped by these brands, rather than the salon’s brand shaping its culture.

As an owner, you need to look at each bottle on your shelf as a $20 bill, because to you and your business, that’s exactly what it is. There isn’t a magical number to how many lines you should carry, but if you do carry multiple lines, you have to make sure they are strategically positioned in both behavior and price point so they don’t compete with one another and so they all support the kind of salon that you strive to be.

For example, if you’re a luxurybranded salon, you should be in a luxurybranded space and carry luxury brands.

The way to determine how much inventory you should have is by examining your ability to support it and sell it. Any line you consider adding should add incremental sales. That means anything you add has to carry more sales, not just new sales. Because for the average salon, more and more inventory often means less cash flow, less profit and less commitment from a hairdresser to a single brand.

Remember there’s will and there’s skill. Once you’ve strategically selected your lines, you also have to make sure your staff is educated, knowledgeable and on purpose. And you have to support it with great displays and merchandising, and marketing and promotions. In most salons, as the SKU count goes up, product knowledge, education and awareness of each line tends to go down.

Now, of course there are exceptions—if your salon is located in the Mall of America and you’re paying a high rent to have thousands of passersby every day, then having a retail focus with 50 different lines could make solid strategic sense. It all boils down to what retail strategy makes the most sense for your salon brand.

Salon Visage (Gambuzza’s salon) in Knoxville, Tennessee, uses a retail strategy that utilizes a good, better, best approach, with three different offerings at different price points. But the salon also chose to focus on one “hairdresser-driven line,” and that line is the one they hone their education on so each stylist understands it inside and out. Rewards programs are centered on this line, the most shelf space is given to this line, new staff members are given samples to experience, and it’s the line that is used at the backbar.

An Inventory Exercise

As an owner, there are a few exercises that can help you strategically think about your retail. First, print off a list of every SKU you haven’t sold one of in the past month. You might be shocked to ­find how many you have. Ask yourself, do you really need to carry something you haven’t sold in the past month?

Second, look at your retail shelves, and ask yourself, “What was my strategy for the brands I’m carrying?” Can you easily answer that question? Does your strategy make sense for your salon brand?

 

Inventory Control in Action

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