Provider Strategy

Using Inventory to Drive Retail Sales

The link between inventory management and moving cash products.

When business owners undertake a retail venture, they often think, “If I build it, they will come.” There’s a misconception that if there is a store with doors wide open, then customers will trickle in naturally. Unfortunately, the market and the customer aren’t always ready for caretailing and healthcare retail because we are. Therefore, maintaining store traffic can be a bit more difficult than simply “building” and having faith loyal customers will continue to cultivate. Instead, there must be nurturing and continual maintenance in the form of focused operational efforts with abilities to exceed or meet our customers’ needs. That’s why we are shining a light on the exchange between inventory management as it relates to employee training.

Inventory Management

To maximize the overall purpose of your employees (i.e., serving the customer), we must first understand the desires of the audience we serve. To do this, start by 1) identifying top product categories, 2) moving to top product performers, then 3) identifying the quantities of product needed, and 4) determining reorder points. These four items can work together to ensure your store is an easy, one-stop-shop for your customers. This foundation will also give employees clear direction that correlates with their sales goals. Use this process as a guide:

  1. Identify Top Categories. To start managing your inventory correctly, choose your bread and butter categories. These are the ones that most often drive people into your store.
  2. Identify Top Product Performers. Inside your bread and butter category, you need to identify the products that are performing the best. Do this by using the 80/20 rule: identify the top-performing products that account for 20 percent of your sales and classify the rest of the products that account for 80 percent of your sales within that category.
  3. Identify the Quantities Needed. After you have segmented your topperforming products, it is now time to identify the recommended quantities on hand. For your top 20 percent, we recommend having two months’ worth of inventory on hand. However, for the other 80 percent of your inventory, the middle 50 percent and bottom 30 percent we recommend using your best judgement. We say this because the products in the bottom 80 percent can be volatile in sales.
  4. Determine Your Reorder Points. After you have identified the minimum product amount that needs to remain on hand, stick to it! Reorder when necessary, never letting a product fall under your minimum needs. This will help you avoid those unexpected and unneeded additional shipping costs.

Remember, when it comes to inventory management, it is crucial to evaluate inventory levels regularly. Specifically, daily, weekly, monthly, quarterly and annually. Measures to consider include:

  • Revenue by category
  • Number of items being sold per transaction
  • Number of transactions per day
  • Dollars per square feet
  • Inventory on hand (dollars and product quantities)
  • Average ticket
  • Cost of goods sold
  • Top-line and bottom-line margins

Selling Through Inventory

While offering high-end, cash health and wellness products is a start, a sales program and customer service training around these products is the key to moving product. For this reason, providers must have a strategy behind inventory management targets — beginning with a “why not best” selling program.

One of the biggest selling faux pas our team sees in the DMEPOS industry is feature dumping. Feature dumping is where employees fail to take time and understand a specific product and how it can best serve a particular audience’s needs. With a “why not best” selling program, your staff can meet revenue-based goals and create an indispensable store experience. A “why not best” selling program includes the following:

  • Building a relationship with the customer
  • Understanding a customer’s unique situation
  • Listening and asking questions
  • Suggesting a bigger and better solution
  • Honesty and transparency to close the sale

Did you know that less than 45 percent of companies have a formal sales training process? For this program to be successful, employees must be comfortable and knowledgeable about the current store goods being sold. Putting your sales team through training will provide them with the tools and knowledge they need to succeed. Let employees touch and try out products for themselves so they can create personal testimonies around the product. Roleplaying is also an excellent way for salespeople to practice and prepare.

Creating competitions will help motivate your sales staff to boost performance and be rewarded or recognized within the company or publicly. By creating a friendly competitive environment within your store, you will motivate your sales staff to improve personal performance. Rewarding your topperforming salespeople can provide long-term motivation for your sales staff if the reward is well aligned with their desires. Even something as simple as public recognition monthly can boost employee morale and provide additional incentive to improve performance. Differentiate these competitions so sales staff can practice promoting all top-performing product categories.

Lastly, always remember to set clear and specific goals. Many of our salespeople find themselves overwhelmed with traditional monthly/yearly sales targets that they are given. Often, urgency won’t appear until the deadline approaches. Establishing daily goals for your salespeople keeps them on track and provides them with less intimidating numbers. Creating storewide goals is another great way to boost employee morale and boost performance.

It’s not enough to simply bring on a product for a store and expect sales to boom. It takes consistent inventory maintenance and employees who feel confident to sell products and service customers. By evaluating our inventory levels routinely, we can more adequately give employees the tools to be successful. Without a comfortable balance between our employees and the products we sell, the infrastructure of our revenue will break. However, if we allow these two pieces to work comfortably with each other, then we are positioned for efficient success.

This article originally appeared in the October 2019 issue of HME Business.

About the Author

Rob Baumhover is the director of VGM Retail (, which helps VGM members diversify their businesses through improved retail operations.

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