Weird question, huh? Well, maybe not so weird. But before I explain, do you know how much inventory is in your store? Knowing the total would be a good start, but how much is in each merchandise department? How much of that is current and how much should be marked down? How much is just old and unsaleable?
Most retailers don’t concern themselves with this type of information, they just keep buying because that’s what’s fun. What’s more fun than getting in shipments of new merchandise, opening the boxes and hearing the “oooows” of delight from your staff and customers? But that older stuff, we just keep pushing it around. And that older stuff, it’s your profits that will never materialize.
Now you have all sorts of inventory information on your Point of Sale (POS) system, but do you look at it before you buy more? And how do you make sense of all the departments and the seasons and what about turnover? Actually, it’s a bit mind-boggling, but there’s an easy way to deal with it. Open to buy planning will keep track of your inventory and tell you how much to buy based on what you expect to sell and the rates of turnover you want to achieve in each department.
Sound good? Of course it does, and yet most retailers shy away from open to buy planning since they think it will get in the way of their creativity. Nothing is farther from the truth. While you are a very creative person and want your store to reflect your vision, your store is mostly your vehicle to make money. Once you lose sight of that, you’re in trouble.
Open to buy planning will develop YOUR buying plan based on YOUR projected sales and YOUR desired turn rates. The calculations begin with YOUR actual inventory and so the buying plan is tailored specifically for YOUR store. Now if you take that buying plan as the gospel and use your creativity to choose the best available merchandise, you’ll never again have to worry about how much inventory your have and how much needs to be marked down and how much is unsaleable. Why? Because your open to buy plan will insure that your inventory (chosen with your creativity) is always correct to meet YOUR sales at YOUR turn rates.
And that’s the only answer that you need.