When inventory collects dust on your shelves, every month it’s parked there, motionless, tying up money you could use to enrich your business. It makes sense, then, to unload old race parts and slow sellers as quickly as possible.
“Sometimes when the new stuff comes out, people don’t want the old stuff anymore, so it’s really tough,” said Mark Tusing from Tiffin, Ohio-based Kear’s Speed Shop. “Luckily, there’s a large diversity of racers out there—there’s usually somebody looking for something that’s old or outdated, or both, because of the price.”
The company typically advertises its slow sellers on its Facebook page and website—and oftentimes, it comes down to slashing prices to scoot those dust collectors out the door. “If it’s been on the shelf for more than a year and there’s no movement, we have to put a figure on it that we think is going to move it,” said Tusing.
The goal is always to reduce prices enough to encourage sales, but not so much that it puts you in the negative. “Don’t make it a habit of taking a loss on your products or your business will not be around,” said Ron Zappendorf from Dawsonville, Georgia-based Discovery Parts, which ensures all items are moved off shelves within a year from purchase. “But sometimes, to avoid years of inventory tax on the same item, sell it.”
The company provides Internet, retail store, and trackside support access to its products. “Sales are sometimes done without advanced notice at the track before the racers show up to one of my events,” said Zappendorf. “Some trackside sales are notified through the particular car club that I support for that weekend. At the retail store inside of Atlanta Motorsports Park, I would have signs made to attract walk-in customers.” Email notifications also announce special pricing.
“If the eliminated item has a replacement, then the new item usually costs more,” he continued. “If I know that for a fact, then I would share that with my customers. Sometimes a new item doesn’t necessarily mean it functions any different. It can be just a different look. Getting a discount on the older model isn’t so bad. I would probably take a 2013 911 turbo, with the 2014 coming out, at a discount.”
When you’ve been in business long enough, you learn to adjust your buying decisions to avoid products that might sell at a snail’s pace. “We really don’t have that much old inventory,” said Dicky Jackson from Paragould, Arkansas-based Dicky’s Racing Parts. “It’s pretty rare, really.” That’s because the team at Dicky’s keeps on top of inventory and industry trends. “I make it a point in the sales meeting here that everybody is aware of what’s changing and going on, so we work to that end.”
Jackson is also in very close contact with manufacturer representatives, speaking with vendors at least once a week. “We try to go over the newest stuff and what’s going to be replacing what,” he said. “Sometimes they discontinue something just to bring in another phase, so we try to stay up with that at all times.”
To keep inventory fresh, Kear’s has cut back on the quantities of in-stock items. “We have reduced our inventory on the shelves. We’ve still got to keep the trucks loaded because you don’t want to lose a sale at the races,” said Tusing. “We don’t have to buy the bigger quantity items; you just wait until you get down to almost the three on the truck before you reorder them, as opposed to waiting until you get down to one or two on the shelf.”
He’s also very cautious when buying sale items from manufacturers. “Every once in a while, the vendors call you at the end of the year, and they’ll say, ‘Hey, we’ve got a good price on this. You want to buy some?’ Well, they don’t tell you they’re coming out with a new, improved product in two weeks. So you think, ‘Well, sure. We’ll take some of those,’ and then find out in next month’s magazine, everybody wants the new one and you’re sitting on all the stuff that you just bought at a reduced price.”
No matter the bargain offered on a product, if it never leaves your store, you’ll never turn a profit. “Beware when the manufacturer’s offering something as a drastically reduced item,” he said. “Start asking, ‘Why are you doing this? Do you have a new product coming out?’ Sometimes they’ll tell you; sometimes they don’t. You just try to get a little smarter in your buying. You don’t buy them until you actually need them anymore…. We can’t afford to stock them on the shelf. It’s just the way inventory is nowadays. You can’t have 15 items on the shelf, like you used to be able to.”
Richmond, Virginia-based Performance Autosport had to dramatically change its business structure after the recession hit several years ago, when it seemed most performance customers turned to Internet shopping in order to save a buck. “Before, we would never take parts that somebody brought us; we always had to supply the parts,” said Mark LaMaskin. “Now, we encourage the customer to buy the parts and drop-ship them to us from the bigwigs that are selling them…. At one point, we had anywhere between $50,000 and $70,000 worth of regular parts in stock. We stopped stocking parts because people could go to various Internet retailers, pay within $5 or $10 of what we paid for the stuff as their retail price, and not have to pay any sales tax on the product—and get it shipped for free. So they would come to us, look at the part that we had, hold it, put it in their hand, get all of our advice on how it worked and what would work best with their application, and then order it online and put it on themselves, and we’d never see them again.”
Ensuring that inventory never collects dust on the shelves, component sales are rarely part of Performance Autosport’s business, except for a couple of niche suspension pieces. “We used to get the customer that came in that had the sticky fingers, that had to get it put on that day,” LaMaskin continued. “But we don’t have as many of those customers anymore that look at the intercooler or shifter and say, ‘I want to get that put on right now. Can you stop what you’re doing and put it on?’ They’re not walking in the door.”
In a perfect world, you’d be able to either return unused, discontinued products back to the manufacturer, exchange them for other items, or at least get store credit. In Tusing’s experience, however, manufacturers usually don’t take returns. “They’re in the same boat,” he said. “Manufacturers get to a point where they don’t have a lot on their shelves anymore because of all the changes that have happened over the years, going from normal stuff to light weight, and now we’re going back to where people don’t want the lightweight stuff…. Manufacturers will not generally take them back from over 30 days, so we’re basically stuck with it.”
In general, the team at Discovery doesn’t try to return products. “Something we don’t usually sell and the customer special orders it, if the manufacturer would take it back, I do want to send those back,” said Zappendorf. “Something the manufacturer had to order from Italy or Germany, it’s known the manufacturer does not want to take it back. It’s about half and half who takes back inventory. In general, the American companies like Bell, G-Force and Simpson do try to work with us if we needed some things returned.”
Jackson, on the other hand, recalled an instance when a manufacturer actually approached him to take back pit equipment that was on the showroom floor for a year and just wasn’t selling. “They were going back through their records and seeing that I hadn’t ordered anything. So, when they called me, I said, ‘Look, we’re not moving this inventory here for some unknown reason.’ And then come to find out, somebody else was making it, but it was a lot cheaper, so it was overriding us. They decided they would take it back and go about manufacturing something competitive with the other place.”
Out With Old, In With New
For retailers trying to stay on top of supplies, there are many factors to consider when determining which items will be hot, and which are not. After all, every business is different, catering to its distinct group of racers, so what may be successful for one business may fail for another. For instance, at Discovery Parts, the more entry-level items don’t seem to move very quickly, since the company caters to private club members and car club members. “We do stock the [entry-level] items because we are here to serve everyone that wants to go into racing,” said Zappendorf. “Instead of the $100 entry-level SFI-1 suits, we cater to someone that would like a more custom fit at a higher price, which usually leads to higher rating of SFI-5.”
He also discussed instances when items didn’t quite catch the eyes of customers. “I’ve had times where I asked myself where some of the items even came from,” said Zappendorf. “I did have someone eBay some miscellaneous brakes that were sitting on my shelf for a while.”
Jackson’s team at Dicky’s Racing Parts checks inventory about every two to three weeks, and if something isn’t selling within six months, a more proactive sales approach must unfold. If a product lingers around for more than a year, it’s taken to auction. “It’ll sell for whatever it brings,” he said. “They have racing auctions around, and flea markets, auction dealers around all over the country. We have several around here within 100 or 150 miles. We’re normally invited to all of them in our area. You’re going to get rid of it then, because somebody’s going to buy it.”
In racing, it’s often out with the old and in with the new. “I’ve got a couple magnetos that have been on the shelf for a while that we’ve got to do something with,” said Tusing. “There’s not a whole lot you can do; you just try to reduce the cost on it or offer it to some of your better customers.”
Tusing takes old inventory to local swap meets or racing flea markets, but there’s no guarantee they’ll be gobbled up. “It depends on how many you’ve got,” he said. “I figure, if you’re sitting on six of them, you’ll sell one if you’re lucky. But if you have one, then you’re more likely to get rid of it. It just depends on how many you get stuck with. Back in the good old days, you had to order quantities to get the best price, so you were buying 20 of everything just to get the best price. That’s why you get stuck with so many things, and it’s even that way today.”
Lastly, retailers that need to better gauge products in order to anticipate slow sellers and fast movers, may simply turn to the computer for previous sales comparisons. “There are so many advanced technologies in mail order programs that all businesses should consider updating if they do not have the latest technologies,” said Zappendorf. “A good program will be able to provide that information of what’s selling and not.”