Back when I was in my first store, I had the feeling that as business picked up in November and we headed for December that sales would grow and grow until they reached a frenzied peak late in the afternoon on December 24th.  Then, we would close the store, have a small employee party and hand out Christmas bonuses, wish everyone a Merry Christmas (or Happy Hanukkah) and I would lock the back door and never come back again.

 It actually happened pretty much like that except I was back at 9:00 AM on Christmas morning trying to create some order in the mess that had become my very organized store, because I knew that on the morning of the 26th, we would be inundated again with returns, exchanges and those with cash from holiday gifts.  And on it went.

 And then it was off to the shows and down to the Merchandise Mart.  Things were different back then and manufacturers actually cut for stock.  So while there were some future delivery orders, mostly what was ordered came in from the vendors in short order.  Gradually things began to change with the vendors just creating sample lines to show before they made commitments to their vendors.  And what they did produce was just to cover the orders they had in hand.  So, buying became more science than art.

 In the good old days, “open to buy” was more of a catch phrase than a must have procedure, but today is much different as I gradually found out.  I was a good merchant, picked items my customers (and staff) seemed to love and my sales continued to grow unabated.  But things got tight for me since I had become a big buyer and never wanted to disappoint any of my rep friends by not giving them a big order.  Of course, they played to my ego (which definitely needed some resizing).  As my inventory outgrew my sales, I found my cash flow dried up and the “free wheeling” days were over.  I decided to develop an open to buy system for real and it took me a year to figure it out.  A year without buying.  I didn’t miss a sale during that year, that’s how over stocked I was.  By the time I had my OTB working, I had worked my inventory down by ¾ and had raised my turnover from a 2 to an 8.  Then we finally started buying, but by the numbers.

 Today, operating a retail store without an open to buy plan is financial suicide.  You cannot do it in your head.  Your reps don’t have answers for your store.  You must have an OTB plan based on your anticipated sales and you desired turn rates.  If you don’t, no matter how well you know your customers and your products, you will buy improperly and have cash flow problems. 

 So, I learned that unless you want to see your business rise to a resounding crescendo on December 24th and then close your doors and never come back, you better have an OTB plan in place to insure that you are on target in the coming year.


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