What do restaurants and retailers have in common? Turns. That’s what.
If you’ve ever served in a restaurant, you know that the amount of money that a server makes depends on how often tables turn.
Retail inventory turns are like restaurant tables
If a server has five tables in one evening, and everyone is slow to order, leisurely to eat and stays for every possible course, finishing it off with a cappuccino at the end, the server might only get one to two turns per shift. And the server’s tips (hard-earned cash!) come from the number of tables served.
Now let’s say another server works the same evening and serves the same number of tables, but their section is outside where it’s hot and people want to eat and run. This server averages three turns that evening.
Time to count tips at the end of the night!
Check sizes remained the same and tips were consistent at $20 per table. The first server made $100….. BUT the second server made $150!
That is the simple math of turns. The exact same applies in retail.
You can have two retailers with the same amount of inventory on hand with one bringing more sales revenue than the other simply by achieving more inventory turns.
Inventory turn is more important than item price
It’s a common belief with retailers that it is more important to get the highest price on their inventory, even if it takes longer to sell. But the truth is that non-performing merchandise needs to get out the door so that you can bring something in that is going to yield to a higher margin. Let’s go back to the restaurant example to see this in action.
If someone sits down at your table and orders a bunch of waters and asks about every single price on the menu, you know they are not going to leave you a good tip. So, what do you do? You serve them as fast and efficiently as possible to get them out the door so you can get a better table seated who will tip you better!
Slow-moving merchandise is an opportunity cost
There is an opportunity cost associated with time. The longer anything sits, the less money you make. Turns are the secret to profitability, whether you are a restauranteur or a retailer!
Increase your retail inventory turn today
So, what tables (aka inventory) do you need to turn? Get it listed and sold today on Max Retail!
