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OPINION: Building the Right Mix

A picture of NTP-Stag merchandising director Val Byrd

Among the first decisions any new business owner makes is product assortment. In other words, they must decide what merchandise to sell.

After making the broad decision, their next step is to move on to the specifics, using fact-based information and competitive analysis.

Side note: In my head, I have decided to open a small bakery when I retire. I wrote “in my head” because that is the only place this quasi-dream resides. When I shared this idea with an actual baker in a grocery store, she suggested I rethink this plan or at least give it a trial run before proceeding. Interestingly, this plan will incorporate all the wonderful advice I have been giving others over the years.

When the time comes, I must decide if I will sell bread, cakes, cookies, muffins and/or Kringle. Next, I will have to decide on flavors and whether I will offer custom options, such as seasonal offerings, or selections for special occasions, such as birthdays, weddings, bar mitzvahs and Quinceañeras.

Wow!

The more I think about my dream bakery, the less the endeavor seems to promote the relaxing, leisurely retirement lifestyle I also envision in my head. In any case, the same analysis process must happen, no matter what industry is involved.

Questions you must answer will include the following:

What products should the business stock?

What categories or groups of products are best?

How many different brands and sizes are ideal?

Indeed, these complex decisions are among the most crucial business plan elements. Inventory provides revenue, impacts the business’ image and drives store choice across the board.

Product selection is as important as location in any operating unit’s success. In our industry, this statement is as true for parts and accessories as for RVs.

My colleagues and I are frequently asked to recommend products for new RV accessory stores and fill-in and seasonal orders for existing stores. We are always happy to help. My general advice is to consider your targeted customers’ wants and needs and source any and all available empirical data to support decision-making.

Industry organizations such as RVDA and RVIA gather vital data on camper preferences, vehicle trends, government regulations and state-specific information. Retail RV parts and accessories establishments should seek to build a well-rounded mix of merchandise—stocking RV essentials and a variety of wanted items that appeal to every man, woman, and child who browses the store. Remember, all family members impact purchase decisions.

In addition to finished goods and front-room parts, we can help you optimize your backroom stock with our popular PARTease program, which features carefully curated service parts stocking lists.

Your inventory budget and display space will largely influence the final SKU assortment. I will go out on a limb and state that watching your parts inventory budget more closely than rolling stock may be more important simply because the dealership will own parts immediately.

The goal is to achieve a careful balance, stock the shelves so the store appears “Open for Business” and avoid overstocks and unnecessary inventory. Achieving this will ensure enough liquidity to cover the expenses required to operate the business daily.

We are all familiar with essential camping items, accessories such as a proper sewer hose kit, holding tank treatment, an electrical adapter, RV toilet paper, a water regulator, a surge protector and a few more. Any respectable RV accessory store will provide SKUs in these categories.

Stocking basic (good) items and upgraded (better/best) options within these categories can drive profit, so implement them as retail space permits. I also recommend you include lifestyle categories—products such as outdoor living, housewares and personal electronics—unless you want your retail space to look like a boring hardware store.

Enhancement items such as vent covers, power jacks and Wi-Fi extenders are top sellers and increase profits.

Merchandising best practices demand that every store SKU offer one of the following strategies: traffic builder, transaction builder, excitement generator, image enhancer or profit generator.

Before I entered the RV industry, I worked as a category management team member in the grocery industry, following four categories. These guidelines still apply in the retail industry, so RV parts and accessories stores should include merchandise representing all roles.

Destination categories attract customers to a specific store or retailer. (Think about buying roast beef at Arby’s.) They are typically high-demand categories for which customers specifically visit the store. Examples could include specific hitch brands, solar products, RV awnings or RV furniture and appliances.

Routine categories include SKUs customers purchase regularly, ones considered essential or everyday items. Examples include RV toilet paper, holding tank treatment, black streak remover and RV roof care products. These categories and SKUs bring repeat traffic into the store, so ensuring a consistent product supply and maintaining competitive pricing is best.

Convenience categories tend to include SKUs the customer may not expect the retailer to stock. These categories provide convenience to shoppers by offering products that complement or complete their shopping experience. Examples include sunglasses, snacks, batteries (AA/AAA) and phone chargers. Parts managers should strategically position these products near checkout counters or high-traffic areas to encourage impulse purchases.

Seasonal categories experience demand variations based on season or holidays. Examples in the RV industry include antifreeze and other winterizing products and grilling/patio accessories such as chairs, mats, grills and decorative lights. Parts managers should anticipate these seasonal fluctuations and adjust inventory reorder points accordingly. (Pro tip: A proper dealer management system can help.)

Although categorizing merchandise by role may sound complex, common sense and consumer behavior are behind each category. Each product category’s function will vary based on the retailer’s industry and target market; however, categorizing products into these four roles remains relevant for effective category management.

This information applies to RV dealers of all sizes, as well as bakeries. In closing, I offer my top five universal suggestions for product selection.

Know the target. Align your product assortment with your target market (not your preferences). Consider factors such as demographics and geographic location to ensure the products offered are relevant and appealing to the target audience.

Learn their wants. Customer-demand knowledge is golden. Understanding customer preferences, trends and purchasing behavior is important to knowing which products are in demand. Again, distributors such as NTP-Stag and industry associations can assist by providing research and sales data.

Know the competition. Keep an eye on the products your competitors offer. This research can help your dealership identify market gaps and opportunities to differentiate your assortment. Consider offering unique products or existing product variations to stand out from competitors.

Analyze and tweak. Review each product’s profitability using your dealer management software’s reporting function. Consider factors such as the cost of goods, pricing and potential margins. Focus on products with a higher profit potential and ensure the assortment includes high- and lower-margin products.

Don’t crowd your shelves. Be mindful of the physical space available for product display and storage. Optimize your assortment based on the available space and ensure manageable inventory levels.

By considering these factors, I know each of you can strategically select a product assortment that meets customer needs, drives sales and maximizes dealership profitability.

 

Val Byrd is NTP-Stag’s customer merchandising manager. She has worked in the RV aftermarket for the past 20 years and is a leading RV retail expert on store layout/design and aftermarket product display.

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