Turnover is what sets retail apart from other investments. Your ability to control and raise your inventory turnover determines your ability to increase your income. So, it is unbelievable that most retailers don’t take turnover into account when they plan their inventory levels and their buying.
Your buying determines your bottom line. Buy too little and you miss sales. Buy too much and you build excess inventory, excess invoices, and markdowns. Markdowns are not your friends. When you take markdowns, you are basically giving away your profits and the money you need to pay overhead bills and keep the doors open.
Obviously, sales are an important part of the mix. Sales, along with turnover are the two driving forces in your store. So, it follows that they are the two driving forces in an open to buy system. Your buying needs to be based on supporting your anticipated sales, not on filling space. A larger store will not equate to more sales. Larger inventory numbers will not equate to higher sales. Having the right amount of inventory in the right departments at the right time will enable you to meet your sales projections.
In order to determine the right quantities to buy to meet your anticipated sales you need to factor in turnover. Turnover is the rate at which you deplete your inventory over the course of the year. Lower turnover rates will produce higher inventory levels and higher turn rates will produce lower inventory levels. So it is easy to see that turning a smaller inventory faster is more efficient and more profitable. Every increase in turnover means a greater contribution to overhead and profits. And even more important, higher turnover results in far fewer profit killing markdowns since the merchandise is moving out of the store faster and not sitting and stagnating your working capital.
Open to buy planning, when done properly, is the method of combining anticipated sales and desired turn rates to come up with optimal buying plans. Retail is a bit of a juggling act. While you want to maximize sales, you also want to maximize turnover. You will continue to raise turnover until you reach the point where the higher turnover is causing inventory levels that jeopardize sales. At that point, you will dial back your turn rates a little which will add to your inventory to allow your sales to continue to grow.
Myotbplan.com is the open to buy system that is complete in dealing with all of the elements for your merchandising success. Not only is it built on anticipated sales and desired turn rates, but the annual turn rates are adjusted to reflect the sales impact of each month which makes a huge difference in the projected inventory figures. Additionally when the calculations are run to determine your buying plan, the program makes the proper adjustments to insure that you have ample inventory in your strong selling months and yet go into your weak selling months with the right amount of inventory to insure that you don’t have excess inventory and excess invoices and can avoid markdowns.
Myotbplan.com shows you your performance at the conclusion of each month in sales, inventory, and turnover so you can see trends developing and easily revise your plan for the future. Without these revisions, retailers will always be caught off guard as change creeps into their merchandising.
Coupled with its ease of use, clear explanations on every screen, access from any computer, tablet or smartphone, phone and email support 10/7, and the only Performance Guarantee offered, myotbplan.com is truly the way to make a fortune in retailing.