David Brown

By The Numbers: Give Your Store a BMI Test

Published

16 years ago

November 2, 2008

David Brown Instore November 2008 Issue

TODAY WE’RE GOING to give the average jeweler a quick BMI test. Yes, we’re checking for obesity by looking at the store’s height (inventory) versus its weight (sales excluding repair and custom work). In retail, this is known as the stock-to-sales ratio, and it’s that easy to work out: Just divide sales by inventory.

In August, the average store in our survey had a stock-to-sales ratio of 1.2. That means $1 of inventory is producing only $1.24 in retail sales on an annual basis. This is not good. A ratio of less than 2 (each $1 of inventory is producing less than $2 of retail sales) means the store is in an at-risk health situation. Aged inventory is like blocked arteries — and could well be causing cash-flow and performance problems.

This story is from the November 2008 edition of INSTORE.

Related Topics:

David Brown

David Brown is the president of Edge Retail Academy, a leading jewelry business consulting and data aggregation firm that provides expert business improvement plans to help with all facets of your business, including improved financials, healthier inventory, sales growth, increased staff performance, recruiting and retirement/succession planning, all custom-tailored to your store’s needs. They offer Edge Pulse to better understand critical sales and inventory data, to improve business profitability, benchmark your store against 1,200-plus other Edge Users, and ensure you stay on top of market trends with their $3 billion-plus of industry sales data. Contact (877) 569.8657, ext. 001, Inquiries@EdgeRetailAcademy.com or EdgeRetailAcademy.com.

click to Comment(Comment)

Up Next

By the Numbers: Inventory and Donuts

Don't Miss

Stop Being Mr. Nice Guy with Discounts

Family Legacy, New Chapter: How Wilkerson Turns 89 Years of History Into Future Success

After 89 years of serving the Albany community, Harold Finkle Your Jeweler faced a pivotal decision. For third-generation owner Justin Finkle, the demanding hours of running a small business were taking precious time away from his young family. "After 23 years, I decided this was the time for me," Finkle explains. But closing a business with nearly nine decades of inventory and customer relationships isn't something easily managed alone. Wilkerson's comprehensive approach transformed this challenging transition into a remarkable success story. Their strategic planning handled everything from advertising and social media to inventory management and staffing — elements that would overwhelm most jewelers attempting to navigate a closing sale independently. The results speak volumes. "Wilkerson gave us three different tiers of potential goals," Finkle notes. "We've reached that third tier, that highest goal already, and we still have two weeks left of the sale." The partnership didn't just meet financial objectives—it exceeded them ahead of schedule.