web site updated 3 July 2007

Retail Isn't Detail

As a veteran of systems sales in both golf and specialty retail (primarily apparel), I am amazed to see what many software providers believe inventory management is. I guess I should not be surprised since many of these companies have sought the advice of customers to build and modify their products. Let’s face it; green grass golf retailers did not get into the business to open a retail store. They did it because the golf course had to have a place to collect green fees and sell some products needed by golfers. Retail experts, they are not. But don’t feel slighted; most retailers have little more insight into inventory management.

In the last four years, I have reviewed many products for retail (small to midsize) and golf course clients. To be fair, the golf system companies have spent the most time on tee time maximization and generally do a good job on that side. But when it comes to inventory management, most affordable general retail and golf retail software offerings can best be described as having (1) a replenishment report and (2) a sales and gross margin report. If replenishment is one “answer” to inventory problems, then it requires that you input your inventory into the system by every minute detail. That means a new item number for every vendor, style, color and size (in apparel). Then you have to determine what the minimum quantity that you wish to carry and how many to reorder. Wait a minute! That desired quantity is probably not the same in June as it is in January. In order to utilize this feature, you have to keep changing the required quantities. It’s not going to happen. Do you have time to do this?

Secondly, how much of a golf shop is truly replenishable? Most products have either fashion or technological obsolescence. Maybe less than 10% of your shop might be replenishable on a consistent basis. Interestingly, I have retail clients with sales of $500,000 - $1M who manually inventory a particular class each week to reorder, despite the fact that they have a sophisticated retail system.

Software companies' last side to inventory management is that infamous sales and gross margin report. The implication is that you should review what you sold last month or last quarter. OK. Then what do you do when you see that? It’s too much detail. Would a controller close off a month and then review the financial health by searching through general ledger entries? Of course not. The controller reviews a financial statement which is a comparative report of current data against a budget and/or previous period. THEN, the controller looks at the details where variances appear unacceptable to determine if action is warranted.

So retail isn’t and shouldn’t be detail. It should provide a comparative tool that leads you to look at the best and worst 10% of your retail business. It is missing from most of the typical software products. There are ways that you can get around these weaknesses and future postings will help you understand better.