When Kevin Johnson had a job in a grocery store in high school, the owner never let the employees keep any products in the back room.
“He said, ‘If it’s in the back room, how are we going to sell it? Nobody can see it,'” Johnson recalls.
He remembered the lesson, and uses it now as owner of two Columbus area Music Go Round franchises.
“If it’s in my back room, it’s either on layaway or it’s a case to something that’s out here that you can see,” he says. “It’s part of the turning — getting stuff out to sell.”
Johnson had never run a store or owned a business before he decided to leave his 15-year stint in the grocery industry, where he started as a stock boy and then worked in the corporate realm, selling products to grocery stores for Nabisco, Quaker Oats and Smucker’s.
He had a goal to start his own business when he was 40, but at age 31, he found himself out of work. So he took the plunge and responded to a Music Go Round business opportunities ad.
Training from the company sent him on his way to success. He was profitable within two years of the 1996 opening of his Bethel Road store, where he sells used and new musical instruments and accessories. Business practices he learned from the grocery industry have served him well in the franchise. In 1999 and 2000, in fact, the store’s gross sales, margin and improvement over the previous years made Johnson’s franchise the most successful in the Music Go Round system, which includes 75 locations in 29 states.
Last November, he opened a second store in Gahanna, and he and his 13 employees grossed $1.3 million in 2000 for both stores combined.
Here’s what the grocery industry taught him about retailing:
* Use upfront pricing.
When you go into a grocery store, you know what everything costs.
“You walk down the aisle and they’ve got stickers on everything,” he says.
It’s not the same in the music industry, however, where prices often are negotiable. The practice was not something Johnson wanted any part of, so he decided to put price tags on all of his merchandise — in plain view of the customer.
“Make it so the customer doesn’t have to think,” he says.
* Shake things up.
Johnson noticed that every so often, grocery stores would move their products to different areas of the store.
“You go to Aisle 3 for deodorant, and they’d changed that to baby food. So now you go to the grocery store for deodorant and they hope you find two other things to buy on the way,” he says.
In his stores, he tries to move things around every so often just to change the traffic flow to force customers to see different things.
“I just move things across the aisle and people will say, ‘When did you get that in?’ Well, it’s been here two and half months,” Johnson says. “It’s not trying to be tricky — it’s just trying to sell things.”
* Manage your inventory.
When Johnson was selling dog food or Rice-A-Roni to grocers, for example, they’d set him straight on how much business they’d give him.
“They said, ‘I sell 10 of those a week. I’m not going to buy 50 from you,'” he remembers.
Just-in-time delivery helps.
“I don’t need to have 15 of something. If I sell one a week, I can have three on the wall, and if I get a run on them, I can get them quickly,” he says of some of the new products he sells.
His biggest challenge, a deviation from the grocery industry, is getting used products to fill his shelves. He’s always looking for used instruments to buy.
“I can’t call up and order 40 used clarinets,” he points out. “I don’t know what I’m going to have in from day to day.”
He’s turned to grass roots marketing in this area, keeping in touch with customers who come in, placing ads in newspapers and the Tradin’ Times magazine and even putting signs at intersections. He goes to auctions and garage sales to find products, too.
* Keep it moving.
A well-run grocery store turns its inventory 12 to 13 times a year, but the music industry standard is 1 to 1.2 times a year, Johnson says. Using what he’s learned, he’s got his annual turn rate up to four.
“If something is here three months, that’s too long because that’s my four turns a year,” he says. “We have a ‘Tired of Looking at It’ sale.”
It’s another grocery lesson learned from the practice of putting sale items in a “reduced cart” in the stores.
He’ll keep marking things down until they sell — or, if enough time passes, he’ll put it in a basket labeled “Free.”
“I don’t care if I take a loss,” he says, adding that he’d have to pay property tax on the product anyway, and it’s taking up space where he could have an item someone might want to buy.
“The retail mentality is, ‘This is worth $400.’ If this is in here six months and it’s not selling, it’s not worth $400. Sell it for whatever you can, and get something else you can make a profit on,” he says.
Through his entrepreneurial experience, Johnson has learned another lesson: Stick to your guns.
When his stores opened, musicians would come in wanting to negotiate prices like they could in other stores, but he’d tell them they’d have to buy at the sticker price or he’d simply sell the item to somebody else.
They’d leave, think about it, and return in a few days or weeks to find the item gone.
“Now they’ll become regulars because they know we’re for real and the prices are right,” Johnson says. “I wanted to give everybody the same deal.” How to reach: Kevin Johnson, Music Go Round, 457-9328 or 473-0100
Joan Slattery Wall ([email protected]) is associate editor of SBN Magazine in Columbus.