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One of the key components and one that is the least frequently maintained by most independent retailers is a regular maintenance program of adjusting the dominant and opportunistic assortments in the store.

In order to do this efficiently, it is necessary to first establish where the store is in its life cycle. Based on that information, it is possible to establish a methodology to the review process.

Let’s begin with a new business. In this environment, there is no history, nothing to compare this-year sales versus last-year sales to make a sound management decision on any part of the inventory assortment. It is best to understand that the store’s customer is just getting acquainted with the store and, as an owner, you are just getting acquainted with the customer. The impact the assortment is having on the customer’s shopping and buying habits may not be established for six to 12 months. Therefore, while it is good to monitor what is transpiring, especially at each vendor reorder, it is not essential to make changes in the assortment in the first year of business.

Impulse merchandise such as Chef’s Tools (gadgets) will turn rapidly and be the first and most often ordered product. Cookware, Cutlery and Bakeware will turn more slowly unless there is a pent-up demand in the marketplace for the products.

It also will take time for customers to demonstrate through purchases what branded products they prefer and which lines within each classification are likely to become the leading sellers. The success of the selling of these brands does not mean it is time to close out slower branded lines.

It is essential the 80/20 rule be remembered — 80 percent of sales will come from 20 percent of the merchandise assortment; but without the other 80 percent, the 20 percent is unlikely to occur.

At the end of the first year in the life of a business, as comparable sales data becomes available in the 13th month of operation, is the time to begin making the first adjustments to classification assortments. It is generally best to look at all the vendors in a classification and make or not make changes in a single classification at once. This is detailed analytical work that requires a great deal of effort. The less experience an owner/buyer possesses, the more difficult this process will be.

If professional consulting was used to initially assort the store’s product mix, it would probably be a good idea to get that individual involved with you on this process. The expense will more than give you an average return on the investment.

In all likelihood, at the end of the first year, 20 percent of the bottom half of product sales will need to be closely scrutinized to determine what should be eliminated from the classification due to poor performance. Reviewing the bottom 20 percent of sales is also essential for a more mature store to do annually as well.

Be aware that some items — despite poor overall sales performance — should remain in the assortment. Examples of these items might be a Bain Marie, Charlotte Molds, and/or a Chinois and pestle. They say who the store is, “a professional, knowledgeable resource for cooking and household-related products,” and the place to shop. Remember, the purpose of a dominant opportunistic assortment is to create a top-of-mind customer awareness that “this is the store where I want to shop and buy my household needs.”

This is the image the store should be creating and one not to be taken lightly because the numbers are not everything they should be. Let the big box stores with the computer hot shots make those kinds of mistakes. This is why those retailers are your best friends, and the independent retailer is able to outperform them on a dollars-per-square-foot basis. Volume is important, but the quantity sold is meaningless when overall store performance is $180.00 to $250.00 per square foot while an independent retailer’s dollars-per-square-foot performance is $450.00 plus.

So, what if the store has been in existence for some time, what should this store be expected to do? To start with, everything the new store does at the end of the year, plus. What is the plus?

The plus is that product and vendor line performances should be reviewed on every buy once comparable sales data exists. There should be an ongoing thought process of where the store is going with a particular vendor or classification assortment. Is it staying status quo? Should it be shrunk? Should it be expanded? Always ask these questions. The answers should then be evaluated along with the role the vendor is playing within their classification of merchandise. The results of the analysis will determine if the classification needs to be expanded or contracted based on dollar-sales-per-square-foot performance.

The bottom line is that if all you are doing is buying and not evaluating performance at the item level, the vendor level, and the classification level, then the buying job is not being done correctly. If you continue to go down this path, then dollar-sales-per-square-foot will shrink and not increase from year to year. Even a mature store, five years or older, should have some growth beyond inflation every year. The buyer is responsible for making sure that happens.
In my experience, if a store shows decreasing sales performance — unless there is some spectacular outside force influencing it — the assortment is usually the culprit. Have you evaluated how diligent a buyer you are when it comes to this type of analyzing?

Having said the above, the following words of caution must be mentioned:
• Do not drop an item, a vendor line, or shrink a classification of merchandise too soon. This is a buying sin I most often see when I am in the field at stores who are having sales performance issues.
• Do not add or expand a vendor line, or increase the space devoted to a classification of merchandise because it is a cool product or a “hot” new introduction. The store will just become cluttered, which will have an impact on sales. A store must have an ease-of-shopability to make customers feel comfortable and have an enjoyable experience.
• Adding and deleting is an integral part of running an assortment in a store, but indiscriminate adjustments lead to chaos and sales decreases. Do not add or delete because you like or don’t like the vendor or the sales professional calling on the store. This is a business, not a friendship. The latter is only okay outside the business decision environment.
• Be realistic and think through the process logically. Impulsive decisions will be costly. Especially by the time you recognize the error.
If you think I am kidding about any of the above points, pick up some of the trade journals and study the problems some of our “big box” retailing friends frequently have. For the most part, they are assortment driven. Your stores do not have to be like them.

I’d like to believe you are smarter than them. Are you?

Robert F. Coviello is the founder and president of HTI Buying Group, an organization of independent housewares specialty store retailers and industry vendors. He is also president of Housewares Tabletop International, a consulting firm that provides innovative solutions to strategic challenges facing companies in today’s dynamic housewares and tabletop industry. Bob has more than 35 years of experience in the industry and is an acknowledged industry expert in the housewares field.

If you would like to comment or send us your feedback on this column, please send e-mail to mkeighley@gourmetretailer.com.