I have a friend who runs a traditional retail convenience store in the Springfield area. I’ve never been a fan of the retail business model, because of all the inventory you have to carry. He has to spend a lot of time carefully managing the items he has in stock. This distracts from the other aspects of running the business. Personally, I am a high-level manager. So I would not step down to this level of micromanagement. I would just outsource it – hire someone to do it for me! Preferably some kid that I could pay minimum wage.
One retail outlet that really has its inventory management down to science is Walmart. It’s amazing how they maintain their margins while still selling things so cheap. This is due not only to their preferred pricing arrangements with suppliers, but also to their sophisticated inventory management software. That company has continued to do well in the economic downturn. Personally I don’t shop there because I am a high-level manager. I prefer to do my shopping at more sophisticated outlets. All of my suits are from Brooks Brothers of course. You won’t find me wearing an off-the-rack suit from JC Penney’s, that’s for sure. I keep my tailor busy.
Anyway, back to my friend who manages the retail outlet. Lately he’s been selling one high-margin item – vaporizers. Since he started stocking them, many people have come into the shop and asked for the best vaporizer. Apart from that, he also sells various furnishings for the home. One item that was a popular seller throughout the fall were fire bowls. The sales of are slowing down a bit now during the winter time. So the store is getting some rapid inventory turns on those. ‘Inventory turns’ is a sophisticated term that those of us in the business world use. If you don’t know what it means, I would recommend you go and Google it. Speaking of good businesses, Google is definitely one of them. Have you taken a look at their financials? Their net margins are consistently above 25%. It’s all advertising revenue too, from people clicking on those little ads. I’ve heard that you can also get your website ranked highly in the normal Google search, but I personally don’t know much about that. If I was going to do that I would just outsource it.