I have noted significant differences between “average” dealers and those who truly succeed in maximizing sales and profits in their parts, garment & accessories (PG&A) departments. The better metric dealers consistently achieve 35-40 percent (or better) in gross profit margins, and more than $1,000 in PG&A gross profit per unit sold. Many other dealers are struggling to get to 30 percent margins with a less than $500 average in PG&A gross product per vehicle sold.
This department has the greatest potential for gross profit in most dealerships. The quality of your customer’s PG&A experience can significantly impact your dealership’s success at creating “customers for life” and garnering additional major unit sales (and the related F&I, service, parts and accessories business). Your ability to properly manage this department and maximize its sales potential will have a significant impact on the overall success of your business.
PG&A inventory ties up a lot of capital, which adversely affects the store’s cash flow. You can’t afford to have a reactionary PG&A operation. You must develop and operate a proactive department that stays in contact with customers, tightly controls inventory turns and valuation and aggressively promotes sales.
Here are 10 best business practices that you can use to maximize the sales opportunities for your PG&A department:
1. Provide high-quality sales and customer relations training for your customer-facing parts staff. This is surprisingly rare in most dealerships. These are your front-line troops. If you want to see the best results, you need to hire the “right” people and provide them with the proper training to do the job well.
2. Have designated, trained clothing and accessories “specialists” on staff. This best-business practice has worked well for many dealers. I’ve tracked a number of dealers that have used this technique to average more than $2,000 in P&A gross profit per vehicle sold.
3. Place displays of seasonal impulse items near the terminals. The caution here is that you don’t want to clutter this area so much that it becomes unfriendly to customers. You want them to lean on that counter and look over the high-turn merchandise on the wall behind you and the impulse items around the terminal or on display in your see-through counters.
4. Have mannequins with seasonal clothing packages displayed in the counter/kiosk area. Clothing can be profitable, but you have to turn it quickly or it can become outdated. It also attracts dust and is hard to keep clean. Mannequins work well to help create visualization for the customer. If customers can see themselves wearing it, and if they can make the emotional connection, the odds on them buying increase significantly.
5. Create mannequin displays outfitted with essential riding gear packaged for on-road, off-road and PWC riders. Offer both “basic” and “advanced” packages. It is our responsibility to ensure our customers have the proper gear to ride safely and comfortably. These types of packages are practical and should be treated as a necessity. After all, they are.
6. Develop a riding gear checklist to ensure your staff asks the right questions to trigger additional sales. There are keyword tracks to use to determine the riding gear needs of your customer. You want them to consistently ask these questions of every customer. A properly trained person will key their sales presentation off the customer’s answers. For example:
Question: “Do you currently own a helmet?”
If the customer already owns a helmet:
“What brand and style is it (full face, etc.)?”
“What material was used for the shell (fiberglass, composite, etc.)?”
“How old is it?” (Age can affect the functionality of the helmet, particularly fiberglass.)
“Where has it been stored?” (Solvent and other chemical fumes can degrade the effectiveness of many helmet materials.)
“Does it have a DOT certification?”
“Has it been dropped or suffered crash damage?” (How do you know whether it will still protect them properly?)
7. Set aside a special area for “on sale” and closeout items. Make sure it is clearly marked with attractive signs that can be seen from the main entrance of your store. This is something that many dealers fail to do. One thing that gets many shoppers fired up is: “What’s on sale?” It’s not uncommon for me to see different sizes, colors and shapes of “on sale” signs or tags in various locations around the store. Take a lesson from other industries and locate these items in a specific area — one that forces the customer to travel through other displays of clothing, accessories, or even units to get to it. This is the milk-at-the-back-of-the-store approach that your local grocer uses.
8. Provide chairs for waiting, changing rooms with full-length mirrors and low-volume soothing music to relax your customers. Think department store. If you want to get the most out of your clothing department, this is a must. My last column described just how important this is to the increasing numbers of women shoppers.
9. Move the majority of your fast-turn inventory closer to the parts counter for speedy access. By reducing the time it takes to reach the inventory that turns the most, you allow your team to spend more face time with customers. You can’t sell to them if you don’t have time to talk to them. Do the math. If you can get one more line item per ticket because your staff had a couple of seconds more to spend with your customers, you will end the year with a significant increase in sales.
10. Promote your own website shopping cart to your in-store customers to reduce the amount of sales you might lose to online competitors. A larger dealer that I recently worked with said he was able to significantly increase PG&A sales on his website simply by educating his customers to shop the dealership’s website first.
I hope you will find at least a couple of ideas here that you can implement to improve your parts, garment & accessories sales. Be sure you have established your baseline performance benchmarks, so you can measure the results of your changes. Remember that the improvements you make and the processes you implement will not maintain themselves. You have to be a proactive manager and continuously monitor and reinforce them, or they will fade away.
Steve Jones is senior projects manager at Gart Sutton & Associates. He has worked in the powersports industry for more than 30 years, for dealerships and manufacturers, and as a consultant and trainer. Contact him at firstname.lastname@example.org.Click here for reuse options!
Copyright 2012 Powersports Business