Business is a roller coaster. What is selling from one day to the next can drive the “buyer” for your company mad. What is hot this week may be cold as ice next week. Trends are changing and it is important to steer your inventory dollars towards emerging trends and reduce inventory for maturing categories.
Why is this important? The single biggest reason would be cash flow. Let’s assume you are doing the same amount of business this year as last year. All things being equal, your inventory shouldn’t grow IF the amount you had in stock allowed you to maximize every selling opportunity while also turning it regularly. So, if new trends are becoming bigger, you need to find inventory dollars from somewhere else.
More and more vehicles are coming from the factory with audio systems that need signal correction that goes beyond signal summing. You have vehicles coming into your bay that need DSPs that allow you to improve that signal before you amplify it and send it onto your upgraded speakers.
Kicker is one of the few companies offering an inexpensive signal correction device in their “Keyloc.” If I had access to this product and the two Keyloc amps, I would surely keep some of these in stock for situations that come up. This is especially true if you encounter a vehicle where a preamp is not available. If this means you need to add $1,000 in inventory here, you need to pull those dollars from somewhere else. Maybe it is time to look at your kit and harness inventory and see if you really need 12 of the 90’s era dash kits any longer. How is your business in replacement mirror monitors for backup cameras? Maybe you don’t need six of them in inventory any longer?
Another emerging category is amplified DSPs. A LOT of brands are now offering them and well-engineered ones can be real problem solvers as they can allow for things like: higher input voltage from newer factory amps, input signal correction and summing, and of course signal output modification. Add in the fact that some brands are offering these in truly compact chassis, and you have a great solution that is getting more popular by the day. We sell solutions that can have 10 channels of output in a chassis similar in size to a DSP we might have sold 15 years ago. Modern car audio technology is amazing me.
Flashable radio replacement modules are becoming a bigger part of business. Some Harley replacement radios even require one to integrate into the CAN-Bus system. Another category is dash cameras, which seem to be growing by the day. For almost a decade, America lagged behind other nations in dashcams. Years ago, I managed website content for dozens of well-respected retailers. I had a client in Canada several years ago that was selling dozens of dashcams a month and I was selling six in a year. So again, if you are adding dashcam inventory and sales are similar, where can you pull inventory dollars?
Remote start season is almost upon us. We can all agree that the market is maturing. Is this the year you finally begin focusing on higher end models to maximize your overall sales volume and cash profit per transaction? My gut says yes.
Finally, if you have good relationships with your distributors and direct accounts, look over inventory and consider asking about stock adjustments. Many vendors will allow you to send back new, unopened, current model inventory for product that is more in line with your needs. Depending on the company, the offsetting order will often be anywhere from 150-200 percent of the returned product. So if you send back $2k in product, they get a $3-4k order. Everyone wins and you now have faster moving inventory and don’t need to do any blowout sales, so your margin stays up.
In closing, I hope you take all of this seriously. The retailers that can manage their inventory and keep up with the trends are the ones that have staying power that lasts for decades instead of years. I wish you well.
Mark Miller (Mr Retail)
Miller is the CEO of Westminster Speed & Sound, an award-winning retailer in Westminster, Maryland. The company was founded in 1969, and Mark took it over in 1990 at the age of 23. He first started in the industry in 1986, so he has been at it for a while. He has served on the board of MERA, taught seminars in over a dozen different cities, and served on the SEMA New Product Awards judging team. He has been married to his wife Dawn for 33 years now and has four grown children and four grandchildren. His hobbies include being a sound engineer, doing life coaching, and being active in the local and national Porsche community.
Great write up, I think it’s important to look at your schedule and how long it is before you would do a job for some of that gear. If you’re booking a week out, do you need 4 of something in stock, when it’s 2 days away and your order twice a week from that vendor. So keep your levels in check vs your frequency of purchases and your timeline for actually needing the product to put in a vehicle.
Very well written, and totally agree with most of that and what I am seeing as a distributor.