There is a general consensus that a stock turn rate of 3-4 is good for bookshops. Although, it is possible to run shop on a stock turn of only 2. To calculate your stock turn, find out your total annual sales and your average stock level (at retail value, not cost).
If you sell $100,000 of books per annum then:
$25,000 of books in stock (retail value) would equate to a stock turn of 4
$33,000 of books would equate to a stock turn of 3
$50,000 of books would equate to a stock turn of 2
$10,000 of books would equate to a stock turn of 10
If your stock turnover is too low, that means you have too much money tied up in books on the shelves, and your shop will start to look tired – customers will keep seeing the same stock.
If your stock turnover is too high, (eg. 10), then you are probably losing sales because of low stock levels – not enough diversity of books to interest all your customers.
Calculating stock turn ratios is a good way to monitor your stock levels and decide to reduce or increase your inventory – or motivate you to increase your sales.
However, it is also true for smaller shops that simply looking at your shelves and talking to your customers will quickly reveal if your stock is looking tired or if the cupboard is bare…
For a more detailed introduction to stock turn rates, Retail Times have produced a very clear and succinct article explaining the stock turn rates and their significance.