#Turnover merch uk how to
#Turnover merch uk full

That’s why it’s important to arm your business with a good POS and inventory management platform that enables you to track your sales and stock levels in real-time. You can’t optimize your inventory turnover without measuring it in the first place. Get yourself a solid inventory management system

#Turnover merch uk how to

Now that you know why you should measure stock turn (and how to do it) let’s look at some of the ways to improve your inventory turnover ratio.

What has to be ordered in advance to allow ample time for manufacturing/production/shipping – By knowing how many times a product turns per year, you’ll be able to plan ahead to ensure that you don’t run into untimely stockouts.Ĭlearly, when you have a solid handle on inventory turnover, you’ll be able to answer - and take action on - the above questions more quickly.

What units need to be relegated to the sale aisle – Stock not turning fast enough? It may be time to put them on sale before they become dead stock.

What items need to be ordered – If the stock turn for a particular item is too high, it could be an indication that you need to order more of it.

Specifically, this metric can inform your decisions on: You’ll make smarter business decisionsĬlosely monitoring stock turn also gives you a better handle on your inventory so you can make smarter purchasing decisions, keep merchandise moving, and sell more of the products your customers want.

Since inventory is often put up as collateral for a loan, banks want to make sure the inventory is easy to sell and can quickly be turned into cash. The measurement also shows banks how liquid your assets are. Inventory turnover is a key performance indicator (KPI) for managing and growing your business. If you’re not measuring inventory turnover yet, here are a couple of reason to consider doing so: It puts you in a better financial position Why do you need to measure inventory turnover? If your retail store is going through its inventory 9 times a year, your purchasing levels might be too low – potentially leading to lost sales if the product is sold out. That said, an extremely high turnover rate is not always positive. In most cases (read: not always), the higher the inventory turnover rate, the better your business goals are being met. The sweet spot for inventory turnover is between 2 and 4.Ī low inventory turnover may mean either a weak sales team performance or a decline in the popularity of your products. Learn More What is a good inventory turnover ratio for retail? For the most accurate data, use your POS system’s reporting capabilities to automatically crunch the numbers when it comes to stock turn. While it’s important to know the formula behind inventory turnover, make sure you automate the calculation process. Being overstocked potentially points to inefficiencies in marketing, sales, and purchasing or to an economic downturn on a local, regional, or national level. Their inventory turnover is 0.29, indicating that they are spending too much money on holding costs (storage costs), and items are lingering on the shelves. Luxe & Company sold $100,000 in goods this year and had an average inventory of $350,000. This number shows that products are selling at a profitable rate.

#Turnover merch uk full

Their inventory turnover is 2, meaning they had to replenish their full inventory twice over the past year. $500,000 in sales divided by $250,000 worth of inventory = 2 High Five Streetwear sold $500,000 in products this year and had an average inventory of $250,000. The formula for calculating inventory turnover ratio is:Ĭost of Goods Sold (COGS) divided by the Average Inventory for the year Inventory turnover formula: How do you calculate stock turn? Throughout the year, there will be peaks and valleys of inventory due to holidays, back-to-school, and seasonal apparel shopping that will skew your numbers. When you compile the average inventory for a year, you get a clearer picture of the financial standing of your business. In accounting practices, it is usually calculated for the year but could also be done on a monthly or quarterly basis. What is inventory turnover?Īlso referred to as “stock turn,” “inventory turn,” or “stock turnover,” inventory turnover is a measurement of the number of times inventory is sold in one year. One of the key metrics that can help you figure all that out is inventory turnover, which as you’ll learn below, plays a critical in planning and managing your stock. Too much inventory leads to high holding costs, while too little stock means possibly missing out on sales.įor the most part, inventory management is all about finding that balance and ensuring that you have the right products at the right time. There is a delicate balance between having too much or too little stock on hand. As a retailer, you’re always looking for ways to increase sales and profits, as well as manage the space you have for inventory.