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Thread: Risky investments

  1. #1
    What's up? drk's Avatar
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    Risky investments

    Play along with me, here, if you will:

    Let's propose that you have a "portfolio" of $100,000.

    Some of it is in low-risk, low-return vehicles.
    Some of it is in moderate-risk, moderate-return vehicles.

    What amount are you personally comfortable with investing in a higher-risk, higher-return vehicle? 10 percent? 20 percent?



    The reason I ask:
    I've been toying with an "investment model" for my inventory management system that includes "annual return on investment", but also "risk".

    When a new line is purchased, generally there is risk involved that they will not sell. Money invested in a new line (although critical to retailing success) could be invested in more safe, proven lines.

    So, what percent of your total inventory value are you willing to "put on the table" like chips in Vegas?
    Last edited by drk; 10-16-2020 at 07:53 AM.

  2. #2
    Snook Fishin' Optician Specs's Avatar
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    Seeing as you are asking Optical Professionals for financial advice, I take it you like to live with risk. With that in mind, I'll give you my advice. Forget about low risk, low return, forget about medium risk, medium return. They take too long. I'd do either of two things, first pick the highest risk investments and throw all 100% in there, some of those penny stocks can really take off and hit big, some don't, the other is quicken the profit or the loss and take it all and go to the horse track or Las Vegas and go for it. Don't forget to bring the deed to your home and car, they may be needed to gamble further to get that return, that you missed with your earlier gamblings.You just never know when your luck will turn. Now, just want to let you know if you need surgery, or want to buy a bridge with a toll contact me I can do that for you too. Inventory and investments are two entirely different things.
    Glad to be of assistance.
    Last edited by Specs; 08-08-2007 at 07:05 PM.

  3. #3
    What's up? drk's Avatar
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    Quote Originally Posted by Specs View Post
    Inventory and investments are two entirely different things.
    Glad to be of assistance.
    Ok, thanks for your opinion

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    I understand what you are asking and I agree that inventory is an investment. You need to assess your customer/patient base and look at their demographics (age, past spending patterns, etc). This data will determine your risk level if you purchase more unique, trendy, expensive product. Turnover is crucial so if you invest in more expensive product that does not sell through well you are increasing your risk and tying up value cash reserves.

    Consider importing unique product yourself (unique does not mean expensive) and price it according to its uniqueness. If you go to any of the international trade shows overseas (in Europe or Asia) you can likely find companies that manufacture and distribute their own brands. You can then buy styles you like without getting involved in designing your own product and producing your own product.

  5. #5
    ATO Member HarryChiling's Avatar
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    I worked with a optician who would 4-5 times a year purchase some really wacky off the wall pieces and order them in all the colors and a few styles. They always sat in the displays in the front window and almost never ever sold, but 9 out of 10 customers that walked in commented how cool they looked.

    I hope you are starting to get the drift. This was as Johns like to refer to it "the carrot" we were thinking these frames were inventory so they were a horrible pick as the turnover was terrible, but as advertising they were the best vehicle we had by far. More people mentioned the frames than mentioned any ads that went into the paper, or any yellow page adverts.

    Don't play around with your inventory, stock what sells and get rid of the dogs or questionable items. Maybe try one or two lines tops and make sure you track their performance before keeping the style in the office.
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  6. #6
    Manuf. Lens Surface Treatments
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    Redhot Jumper New line might be better.........................

    Quote Originally Posted by drk View Post
    When a new line is purchased, generally there is risk involved that they will not sell. Money invested in a new line (although critical to retailing success) could be invested in more safe, proven lines.

    drk....................I think you are on the wrong track.

    When you buy a new line.............you should get your staff get involved in choosing and purchasing. = democratic procedure
    .
    They are the ones that sell the frames. If they are enthusiastic, or you can make them get there, the new line will be a better bet than the proven one. An enthusiastic persdon can move products like have never seen.

  7. #7
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    inventory

    IMO and experience i like to describe it as core and ancilliary collections that rotate due to market conditions or my whim. My store would have a mix of 70-75% core and the rest fluff i could rotate. I would almost never have more than 12 collections (not reps or companies but "branded lines") in my store. All lines have risks and core frames so i like to take it on a line by line basis instead of inventory as a whole. If i am buying a fluff collection I would never buy less than 36 pieces for me its a must and keeps store looking good. The core styles are purchased at least 3 deep. The crazy stuff 1 maybe 2 if it sells i reorder because the crazy frame in a collection sells the classic frames in that same collection. I would never buy a collection that didnt have some easy to move styles its too much risk. The easy to move styles ARE ALWAYS IN STOCK because i look at yearly inventory turn. There is too much A.D.D. and ebb and flow in most optical shops inventory due to laziness on the buyers part IMO and that is where they get into trouble.

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  8. #8
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    Quote Originally Posted by Chris Ryser View Post
    drk....................I think you are on the wrong track.

    When you buy a new line.............you should get your staff get involved in choosing and purchasing. = democratic procedure
    .
    They are the ones that sell the frames. If they are enthusiastic, or you can make them get there, the new line will be a better bet than the proven one. An enthusiastic persdon can move products like have never seen.

    Very true but sometime you have to educate your dispenser also. I always work my floor its where the rubber meets the road.

  9. #9
    What's up? drk's Avatar
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    Great responses.

    What I can distill here is that:
    1.) Involve the sellers (I try to have good feedback and input, there)
    2.) Crazy stuff looks great, and will sell more moderate stuff. Have some crazy stuff, but realize they're display pieces more than anything.
    3.) Generally have low percentages of avant garde fashion.

  10. #10
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    Quote Originally Posted by drk View Post
    Great responses.

    What I can distill here is that:
    1.) Involve the sellers (I try to have good feedback and input, there)
    2.) Crazy stuff looks great, and will sell more moderate stuff. Have some crazy stuff, but realize they're display pieces more than anything.
    3.) Generally have low percentages of avant garde fashion.

    1. agree
    2. agree wholeheartedly
    3. totally debatable

    personally i hate the term Avante Garde just because it reminds me of the Mt Olympus collection and the Deeda :p. I would consider an invent in my store is always based on fashion (not meaning brand names) and quality period. If a customer doesnt want fashionable eyewear buy safety glasses or contact lenses. I want my customer to look good and havent found any arguments from any patients about that. I like to fit in regards to personality type. If the patient is weird about wearing glasses and wants clean look you can find that in almost every line and actually makes inventory mangement easier. Having a fashionable inventory and great stylists who listen IMO is the only way to compete in todays market; If you take this route inventory management and having a good eye is the key to survival. Even in mass markets differentiate yourself with smaller boutique lines that fill the bill with a minimal cost difference.They are out there and it sets you apart from ABC and Smith optical.

  11. #11
    Master OptiBoarder optical24/7's Avatar
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    Quote Originally Posted by RustyS View Post

    3. totally debatable

    Even in mass markets differentiate yourself with smaller boutique lines that fill the bill with a minimal cost difference.They are out there and it sets you apart from ABC and Smith optical.

    Agreed 100%. In my display window I've got a lot of color and unusual styles like Koali, Fysh and Axebo. As people walk by, that's what draws them in the store. A day doesn't go by that patients don't comment on our selection, how it's different from the last place they purchased their glasses. Sure, we sell more core, but it's the color and unusual that sparks that initial interest in walking in.

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    Manuf. Lens Surface Treatments
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    Master OptiBoarder Crazy-bout-Optics's Avatar
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    I totally agree with this. The last practice I was at, we would display the gaudiest (sp?) ugly frame we could find. And let me tell you, Every single day it got tried on. My favorite is a Cazal Sunglass. Im not sure of the model, but it is a sunglass frame with temples that have a cut out design with rhinestones covering just about every inch of the frame. I referred to them as the "Elvis" Sunglass. If anyone offhand knows the model number, id love to look it up and have a chuckle!

    While it never sold (probably b/c it as Over-priced) It allowed us the opp. engage the person and turn them from a "Just looking" into an actual customer.

    And PLEASE PLEASE PLEASE listen to those people who sell for you. They could tell you what sells, and I myself, being an eyewear fanatic, can even give you the model numbers of the hottest selling frames. The new practice I'm at, the owner, who lives in Ca, (I'm in Tucson) thinks everyone wants black plastic wrapped sunglasses with solid grey lenses. we have about 10 lines, and no matter how I merchandise them they still look the same to my customers :(

  14. #14
    Ophthalmic Optician
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    When I purchase many of the high end and gaudier frames, in my mind, I am taking the funds out of my budget for decorating. I look at these frames as wallpaper. A good example are some of the frames from Caviar w/ all the rhinestone. Sure, we sell one every 2 or 3 years, but I don;t care if we ever do.

    We also have a pair that has all the horseflies on the eyewire. It's really gross, but I guarantee they don't ahve one of those at the MDs office down the road.
    Ophthalmic Optician, Society to Advance Opticianry

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