HOT TOPIC A new look at old problem
Is your inventory passing its best-sold-by date? This guide to other, more efficient and cost-saving methods of moving your merchandise will keep your business fresh without returns
By Erinn Morgan; Photography by Peter Baker
Are returns a problem? Speak to most ECPs and they say "no," returns are a boon to their business. "We really don't have a problem with returns," says Shirley Earley, an optician at Ritter-Hagee Doctors of Optometry in Deer Park and Maineville, Ohio. "Our reps are so good at taking care of us they will exchange products out when we need to."
In fact, the practice of manufacturer returns is so ingrained in the optical industry that many ECPs simply will not buy from a company that does not offer this policy.
"As far as my frame inventory, I only buy things I can return," says Tom Hicks, the licensed optician-owner at Oxford Opticians in Oxford, Ohio. "It just makes it easier for managing my inventory. If a rep comes in, I typically send back eight to 10 pieces. Overall, I am selling pretty well. I only return about 25 percent."
The practice of returns was instituted by manufacturers to get ECPs to purchase their products. Today, however, return rates are soaring and it's costing everyone money. This luxury has built-in product costs in order to make up for all the shipping, refurbishing, and re-selling involved. In fact, many suppliers now offer discounts to optical retailers that opt out of the returns option.
"I think it's a trap," says Lisa Duncan of Duncan & Duncan Enterprises (www.lisaduncan.com), a retail consultant and speaker. "All your open-to-buy is stuck in inventory and returns. You can't go to a new supplier and get something fresh. It's all about having selection, and if you don't have a fresh flow, somebody else will."
So how can motivated ECPs shift the wheels of the returns machine?
| Timeline: Keeping Stock Moving |
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| Retailing expert Lisa Duncan (www.lisaduncan.com) serves up some excellent ideas for employing a markdown flow that could work for your frame inventory from start to finish. While the following timeline can be utilized effectively in retail settings, it should only serve as a guide and can be tailored to your own store's (and products') needs. "You have to stay on top of your inventory," says Duncan. "This formula can work for everything from tires and spark plugs to fashion and eyewear—and it goes for any price range. Anything from $25 to $2,500." PHASE ONE In this phase, you want to make sure that you and your staff are on top of the latest trends. Always be aware when new product is scheduled to arrive at your practice. Two weeks prior to its arrival, send out an exclusive invitation to show the product. Invite customers to view the product while enjoying some coffee and cookies. This will make them feel special and even more likely to make purchases at the full price. PHASE TWO After the products' arrival, take time to assess the attraction of the items. If it's not selling, consider taking 10 percent off (in retail, this could occur after two weeks). This and all future markdowns can be advertised via direct mail or any other advertising method you find effective. PHASE THREE After showcasing frames at 10 percent off for a period (this might be just a matter of weeks in retail), assess sales again. If you find they've slowed, increase your sale to 25 percent off. PHASE FOUR At this point, take 40 percent off the frame. Any profit left will cover the advertising costs. FINAL PHASE When it's time to get straggling inventory out the door, mark it down 50 percent and get it sold. For that last push, do radio advertising—the same time twice a day for seven days, hitting the morning and evening shows for an entire week. |
IS SALE A 4-LETTER WORD?
"Why not advertise a sale and drive some traffic?" asks Mike Hundert, president and CEO of REM Eyewear. "You never see that being done in this industry."
A relatively unexplored frontier in the eyecare business, product sales can be an effective and fun way to move unsold merchandise. Still, most ECPs rely on this retail tactic only as a last resort.
"If we have to, we'll do 50 percent off after about nine months to a year of it sitting on the shelves," says Earley. "But that comes with no warranty because we can't replace it."
Others simply don't run any sales. "We just don't need to," says Hicks. "I've got our inventory management down to a formula. Each company has so many spaces on the board. If a frame is not sold in six to eight months it has to go back."
While returns have been a convenience for many ECPs, the truth is they are costing the industry. "It really comes down to the fact that ECPs should run sales," says Jamie Shyer, the COO of Zyloware and chair of the Vision Council of America (VCA) frame division. Shyer also heads a VCA returns task force, which is addressing some of these issues.
| The Fresh Factor The National Retail Federation (www.nrf.com) has an entire division, called the Retail Advertising and Marketing Association, devoted to how and when to promote merchandise to increase sell-throughs. Here are a few ideas from the experts: ■ Determine the lifespan of your product. "How frequently do customers change frames? How trendy are the styles you carry? Dinnerware patterns used to last 24 months, but now they are replaced every 12 months because of customer demand," says Dan Butler, vice president of merchandising and retail operations with the National Retail Federation, the world's largest retail trade association. "Now, stores are more likely to mark down inventory at the end of year." ■ Work hard to sell merchandise while it's fresh. "Promote it and present it in a sophisticated way," says Butler. "If you can figure out how to strike a balance between the medical and retail sides, you can do better with moving product. Count on the doctor to sell the lenses and count on the store to sell the fashion." ■ The question of the ages: who are you? "The number-one question to ask is what is your image and who are you selling to?" says retail expert Lisa Duncan of Duncan & Duncan Enterprises. "You have to operate from that same premise when it comes to advertising, merchandising, and marketing." ■ Promote, promote, promote. Duncan suggests everything from sending out direct mail pieces once a month to calling your customers. "They say it takes five pieces of direct mail in front of your face before you act," she notes. "I sent a mailer out every month. Whatever you do, it's still the best way of advertising. And when was the last time you called your customer? Nobody calls the customer anymore. So maybe it's time to go back to the basics. If someone is looking for a special frame, call them when you get it in," she says. ■ Display, display, display. "Everybody walks by and looks in the window," says Duncan. "Have a neon-lit sign or even a bright and beautifully painted sign. Promote sales with signs like 'This Week Only' or 'Today Only.'" She also suggests that window displays need to be changed every week—and added to twice a week. Unique displays are encouraged: "We once put live models in the window to move out mufflers and gloves when it got hot," she adds. |
Opinions vary on frequency, but Shyer suggests running sales twice a year. "Attach them to something like a second-pair sale," he says. "Don't worry a ton about making a profit with these second-pair sales. It's more about controlling inventory and doing the customer a service."
While some may be concerned about declining profits, others suggest this can be offset with the money ECPs can save by purchasing discounted frames without a returns option. "We all need to utilize the idea of sales like in other industries," says Hundert. "The high cost of returns just brings inflation and wears on relationships." EB
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