Masterful Merchandising Alpine CA

Uhlmann RV has a history of starting anew. The dealership suffered two consecutive "100-year floods" in 1996 and another just 10 years later, in 2007. Uhlmann RV says that each time, Billy Schidleman, NTP Distribution's national sales manager, was there to lend a hand. When Uhlmann RV completed construction of a new state-of-the-art facility in February, Schidleman once again trekked to Chehalis, Wash. This time he was accompanied by NTP Distribution's SMART team, an elite group assembled to assist with comprehensive store-set services, including floor-planning, merchandising and inventory management.

"We know that everybody has merchandising programs, but we don't look at SMART as just merchandising," Amy Clancy, NTP marketing manager, says. "The SMART program is about strategic merchandising and retail technology. The team does everything from developing the right solution for a retail store layout to integrating computer sets into the location. This is all part of our commitment to inventory management and providing our customers with the right products at the right time. Our SMART team is just one of the catalysts that makes NTP Distribution a different kind of distributor."

Steve Lux, general manager of Uhlmann RV, says that the dealership received a number of bids for designing, stocking and inventorying the retail area of the new location, but ultimately NTP won out.

"Bill stayed true to his word as far as what the price would be, what help we would get and how long it would take," Lux says. "When they told me the store would be set by Friday (within five days), I didn't think that could be done. I was impressed. The store is set like it is supposed to be, not like we think it is supposed to be, because we only do what we have been taught. These guys are professionals and having them come here has been invaluable."

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Dealerships often struggle with handling everyday tasks while simultaneously implementing a store redesign and physical inventory check. The process can stretch into months of chaos with several days of downtime to complete the inventory count.

Quickly taking the project from start to finish is the SMART team's specialty, but Team Supervisor Brian Ledoux says the group is not there merely to make the store look pretty. According to Ledoux, the true focus of the SMART team is "increasing margins on parts."

Having the precise quantity and mix of products placed on professional displays is vital to maximizing profits, according to Ledoux. NTP can deliver parts daily (in certain parts of the country) to prevent dealers from having to overstock and incur unnecessary carrying costs.

"It's not just a matter of coming in and saying this is the best little widget," Schidleman says. "It is a matter of how well those widgets sell for that dealership? How many do they need at a certain time and how fast can we get it back to them when they need more?

"Back in the day, you had peg hooks that were 12 inches long. People bought on emotion, so if the peg hook was 12 inches, they would stock enough to fill 12 inches, even though they were not turning that many. Now we use a 4- to 6-inch peg hook, and you will see two or three items on there. And if they sold two today, they can look at the set minimum/maximums (in the computer) and see they need to order two more," Schidleman says. "It takes the emotion out of buying and that is what brings your inventory down."

NTP carefully tracks product movement at each of its area warehouses so it can recommend the most popular products to dealers. The information determines the top 10 products consumers are buying from each of NTP's 24 catalog sections. According to Schidleman, carrying just those top 10 products will satisfy 90 percent of any dealership's customers.

The SMART team recommends carrying just enough product to satisfy customers between distributor shipments. This reduces inventory carrying costs and maximizes profit margins. Unstocked products can be delivered within 24 hours (in most areas of the country). The distributor has a 97 percent fill rate on the 13,000 SKUs it offers.

"When they keep product in stock, there are carrying costs for that product," Schidleman says. "The carrying costs are no different than the carrying costs of a motorcoach — about 2.5 to 3 percent each month. If they over-order, and even if they get a deal on the product, if it takes a year to sell through, with carrying costs of 3 percent per month, that equals 36 percent. Did you save 20 percent? No, it cost you to hold it and what does that do to your bottom line?"

Inventory

Conducting a physical inventory count and entering the data into each dealership's management software is an essential part the SMART team's service. The company even counts competitor's product as part of the store-set.

Kim Walters, SMART team inventory management specialist, is proficient with a host of six to eight dealer management systems like Integrated Dealer Systems, Quickbooks Point of Sale, Galaxy and Systems 2000.

"When I am not out on the road, that is what I do, I try dealership software demos. I do the research so that when I walk into a dealership, the software is going to work and do what we need it to," Walters says. "We want the software to help run their dealership and give them less man hours to accomplish everything. I try to train that person to use the software to their advantage. They shouldn't have to walk around the dealership just to see what they are out of stock of. They should be able to run a report to give them this information."

Mastering various types of reports like negative quantity reports, purchase history reports and reorder reports are just part of what she brings to the team. Walters says there are a number of common errors she sees on a regular basis at dealerships, like parts being entered incorrectly. As an example, when a 1,000-foot roll of tape is entered in the software as one unit but is sold by the foot, each time a 1-foot unit is sold, the software shows a negative quantity. The software thinks all 1,000 feet have been sold instead of just a portion. Another common error that can dramatically skew inventory is having the decimal point in the wrong place.

"If you have a part number in there the wrong way, it can cause reports to work wrong. When I see something that is wrong, I fix it," Walters says. "There was a dealership we went to and they had never received a part into their inventory. Your dealer management system will let you go as negative as you want. This dealership's inventory was like $357,000 negative. After correcting the negative inventory, I went back through and pored through a 400-page inventory report, looking at the cost of every single part to make sure all of those were correct."

Designing Layout and Placing Product

SMART team Retail Development Specialist Jim Arnold says one of his roles on the team is formatting the layout of the store to ensure there is adequate room for both customers and parts displays. Arnold recommends four to five feet for aisles between displays with extra room near the register. He says that packing gondolas too closely together can be claustrophobic for customers and makes them not want to browse.

Carefully selecting how and where parts are displayed can have a large impact on inventory turns.

"The biggest thing about merchandising is framing it. You want everything to eventually fit into that square," Arnold says. "Generally on smaller gondolas, we put smaller items up top and bigger items on bottom to make them easier to grab. On taller wall units, you want to put bigger items up top, and smaller items in the middle for the same reason, it's easier to grab. You definitely want the colorful stuff at eye level. Anything bagged with a header card, maybe put that a little lower. You also want to keep like product grouped together. You don't want your electrical mixed in with your fresh water or even your chemicals with your fresh water, even though they are kind of similar."

Charla Cox, the SMART team's newest member, advises that new products should be placed at the front of the store to give them greater attention. She says end caps should be changed at least every three months to keep them fresh.

"When it comes to displays, when your store starts to look cluttered, you have too many," Cox says. "You want a store that looks full but not cluttered. It is a fine line.

"Our team really takes pride in how the store looks when we are done," Cox says. "I've noticed that when we go in and do a store-set and then come back months later, they keep it up. It's like when you get a brand new car, you take extra care of it to keep it nice. We come in and do things dealers have been wanting to do, but just didn't have time."