Issue link: https://read.dmtmag.com/i/743349
SOLUTIONS 36 • November 7, 2016 • Powersports Business www.PowersportsBusiness.com You know that your parts, garments and accessories (PG&A) department represents high gross profit margins in your dealership. For many years, the target for both power- sports and automotive dealerships has been for the PG&A and service departments combined to pay for the bulk of the overhead for the dealership. Since service has historically had comparatively low profit, PG&A has had to absorb a higher percentage of the operating expenses. "So what does this do for me?" you ask. If you can absorb these expenses with PG&A and service, you can still operate your business when unit sales are in the toilet — a sad reality we face periodically. First, you need to recognize that there are three distinct businesses under the umbrella we label as "the parts department." Each of these three entities (parts, garments, accesso- ries) has some unique requirements for proper merchandising, stocking, selling and market- ing. In some cases, specialized staffing will help you maximize your return on investment. You need to establish baselines and key measurements for each of these sub-depart- ments. Cliché warning: You can't manage what you can't measure. You need to start tracking these three sub-departments sepa- rately in your DMS. The problem is that most of the OEs (and some aftermarket sup- pliers) have not done a stellar job of defin- ing these categories in their price guides. You have to go through your inventory and ensure that what is categorized as an acces- sory is actually an accessory, not a hard part or clothing and so on. I've seen helmets labeled as parts in one area and accessories in another … by the same supplier. Start this project tomorrow by ensuring that your parts receiver is coding PG&A properly as it comes in. If you are doing cycle counting, fix it as you count it. Some definitions have to be established. For example: What is considered a part vs. an accessory? In general, our 20-group deal- ers define hard parts as being anything that comes standard on the unit. Sometimes this is hard to define, since the bike may come with a windshield or bags, and you also sell the same things as add-on accessories. I prefer calling stuff like this accessories. Hard parts tend to represent primarily repair and maintenance products. Establish sensible rules. You are pri- marily interested in how that overall category performs — how many turns, what kind of margins, obsolescence, etc. PARTS TIPS Increase productivity: Set up fixed bin locations in the department. These can be sec- tions of shelves or drawers in a multi-drawer cabinet, etc. Part numbers within a bin need to be sequential. Outside of the bin, parts need to be organized by: 1) movement, and 2) physi- cal size. Find every part number that turns more than six times per year and put it in a bin location close to the sales floor. Eliminate repetitive and unproductive footsteps. Staff that is not on the sales floor is not taking care of customers (selling). Increase accuracy/reduce shrinkage: Implement cycle counting — count one bin every day. Count your parts inventory six or more times a year and increase accuracy to more than 97 percent. Eliminate non-movers to increase sales: Track parts that have not sold once in 12 months and get them out of your inventory. Non-movers restrict cash flow and cost you money. Use that money to increase your stock of stuff that sells. ACCESSORY TIPS Increase sales with better displays: Install accessories on selected units and incorporate them into "lifestyle" displays. Get everything on display — you won't sell it if they can't see it. Display popular accessories in the service write-up area – this is a second showroom for your products. Work with your suppliers to develop effective displays. Increase labor sales: Add "installed price" signage to popular accessories and sell the installation with the accessory. Many custom- ers buy accessories and take them elsewhere to be installed — you need to capture this business. Once the unit is present, your service advisor needs to do a proper walkaround look- ing for additional repairs and opportunities for P&A sales. Increase sales with accessories "special- ists:" Many cruiser dealers have been suc- cessful with a "chrome consultant" position. Specialists in dirt bike, touring or adventure bike accessories can make a big difference for your P&A business. Ensure they get training on the latest and greatest accessories. Lean on your suppliers to provide this training. CLOTHING TIPS Hire the right people: Enthusiasts who have worked in department stores or clothing sales have been well-trained in clothing mer- chandising and display. This plays a major part in your ability to increase sales in this area. In addition, they know how to properly fit boots and riding gear — very important to today's long distance touring or adventure riders. Open the throttle on your PG&A department RETAIL REMEDIES STEVE JONES See Steve Jones, Page 39