Are you viewing your store through the eyes of your customer or are you viewing your store with an eye on the bottom line? If you intend to survive and even succeed, you need to be focused on your bottom line.

Of course, your customers are important. They are the life blood of any retail operation. Without them, there’s no business and no bottom line to worry about. But focusing only on your customers’ needs can lead to financial disaster. Too many retailers feel they must constantly buy more merchandise to keep up with the times so their customers see “fresh” merchandise when they come into the store.

The problem with this thinking is that merchandise will build up and become markdowns if it sells at all, robbing the retailer of profits and working capital. As I talk to retailers about their inventory problems, their response is always that they have to have new merchandise for their customers.

Another facet of this problem is how much is necessary to give customers enough to choose from? It is generally accepted that more is better, but think about your own experience in a store. Would you rather have a limited amount of good choices or an unlimited amount? Too much is just confusing and tends to boggle the customer’s mind putting off a decision until another time (or another store). So, in reality, more is not the answer.

The answer is the right amount of merchandise in the right areas at the right times to support sales and achieve desired turn rates. Turnover is your best friend if you are watching your bottom line or your worst enemy if you’re not! Sales will go up and they will go down. More merchandise will not make them go up. Seasons, tourism, special events, competition, weather, the economy, promotion, sales people and displays will affect sales. You want to maximize sales, but not at all costs. If you try to maximize sales AND turn rates, you will find that your bottom line is going to be positive and growing.

Turnover is the key to retail profitability and can only be planned and controlled through the process of open to buy planning. Open to buy planning will take anticipated sales and desired turn rates and develop your buying plan. If you stay with that plan and make necessary revisions as trends develop, you will see your bottom line grow whether sales are up or down.

And that’s a very nice view to have.


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