TSO Network Update -February 2018

10 l February 2018 The Importance of Inventory If you are going to build a large, successful and profitable practice, the proper choice in inventory is essential. You cannot build a $1,000,000 professional practice selling junk or cheap eye wear. Here’s the good news, the kind of consumers you want to join your practice do not want to purchase junk or cheap eye wear. Somewhere in the 1980’s optometrists begin believing that consumers didn’t want to spend money on quality and fashionable eye wear. This was largely driven by the large retail chains with their deep discounts and BOGO offers. This isn’t true. Today’s consumers are demanding of quality, fashion and service. Here are three mistakes that when left on their own, optometrists will make when it comes to selecting and managing their inventory. 1. They don’t purchase an adequate amount of frames Many doctors when starting out want to inventory about 400 to 500 frames instead of the 800 to 900 they need. The reason for this is, of course, expense. They think that I’ll start with a smaller number and as I get more successful then I’ll put more product into inventory. That won’t work. That is like saying to a fireplace, “Give me heat and then I’ll put in some wood.” I understand how it might seem logical to the doctor at first but that’s not the way it works in the world of retail. Consumers want selection and variety so you must start by investing in an adequate amount of frames in your dispensary inventory. 2. Not purchasing enough SKU’s of a brand The number one rule of merchandising is to make a commitment to the brand. If you were to go to Nordstrom’s or Macy’s men’s department and found the Ralph Lauren section, you wouldn’t find three shirts, two pairs of pants and a sport coat. No, you find a commitment to that brand, lots of slacks, a large number of shirts in different colors and a complete line of sports jackets and suits. Why then do we think it’s a good idea to purchase six pairs of a fashion brand and 12 of another? In an inventory of 800 frames you should have no more than 20 brands with a minimum of 40 pieces in each brand. This gives the you ability to feature and sell the emotional components of the brand. When it comes to selling sun wear, an office should start with no less than 200 pieces of sun wear and have no more than 4 or 5 brands. Set the sun wear up in its own kiosk or area and create a sun section where people enjoy shopping. 3. Pricing their products to cheaply If you are going to have a retail optical with beautiful design and effectively merchandised, then price the products correctly. The tradition is our industry is to set the retail price by multiplying the cost of that product by some factor, usually 3 or 2.5 times depending on the purchase price. There is a better way. Consumers like simplicity and feeling confident in what they are considering to purchase. Select eight different price points for your optical. Set a low and a high and then fill in the steps. Each price point step should represent a value step or feature of the product that can be explained by your staff. This way, you don’t have a customer confused because one frame is $145 and one next to it is $155. Remember, you can always mark a frame down, package it with lenses or discount it for multiple pairs. You cannot increase the price with the customer once it has been set. Invest in your business. Be confident in the quality of products and services you offer and understand the importance of your inventory. This column by John D. Marvin is published with permission from INVISION magazine.