STOCK TURNOVER
A New England merchant operating a country general store made it one of his business rules that he would never sell an article at less than cost. His way of figuring was that if he never made a sale at a loss he could never lose money and consequently his business was bound to prosper. And so he went on year after year faithfully following out his original idea, which later became as a law to him. Each year contributed to pile up more stock, and each year he found himself with more dead stock, that steadily decreased in value the longer he kept it. There could be only one result following from such a short-sighted policy—the business died of dry-rot. It was then for the creditors to sell the goods at whatever they would bring, and it was an actual fact that some of the goods were found to have been in stock for twenty-five and thirty years.
For our purpose we are interested in this experience only as it shows the importance of keeping the stock moving. The old country merchant knew nothing of the meaning or importance of stock turnover. Today most merchants understand that a great measure of their success in trading is dependent upon the ability of the salesmen to sell out the stock promptly. A profit is made only when the goods are sold, and therefore the store’s success is measured by the number of times a line of goods can be sold out or turned over during the course of a year. To say that a certain line of shoes has a turnover of four, means that the line is sold out and replaced with fresh stock four times during the year.
The following is a word of good advice given to merchants on this important matter of turnover:
Did you ever think of shoes as so many dollar bills lying on your shelves? Picture this thought in your mind. As long as they repose on your shelves they do not work for you. In fact, converted into shoes, they cost money and depreciate in value the longer they stay there. It would be better to have real dollar bills tucked away in your stocking; you would then receive no interest but they would not cost you money.
Keep your stock moving!
Clean out slow sellers!
Stock turnover is the secret of success in conducting a store.
The salesman’s work has a very direct relation to the matter of stock turnover, for, after all, he is closest to the customer and upon his knowledge of the stock and selling ability depends a great deal of the success in keeping the stock moving and of keeping it clean of short lines and dead stock. This is no small responsibility. A knowledge of the stock is essential. On the part of the salesman it requires that he know what goods he has to offer, where he may find them quickly, their particular merits and special advantages from the customer’s point of view.