Retailers can allow themselves to be buried in statistics and many do. Some information about your store can be helpful, but is it important to know every retail formula that can say something and will you really learn anything going forward?
We’ve all heard the jumble of initials from one source or another and wonder if they will help. GMROI. Do you know what that means and can it help you? I’m not here to explain all the high sounding terms available, I’m here to tell you that most of them should be considered as autopsy information. They look at past performance and don’t tell you about the future or how to get where you want to go.
These terms and formulas can come from your accountant (makes him sound really smart) or your POS system (everything’s in there already, so it’s easy to make a calculation. But what can you do with them once you have them? If they sound like you’re doing a good job, they can be quite impressive when you’re at a cocktail party trying to one up other retailers. We are all pretty competitive in that regard.
So, what information can you use going forward, since your business is all about what you do next week, next month and onward? Every aspect of retailing (and there are so many) comes down to turnover. Turnover is the gauge of retail effectiveness. If your turnover is improving, your business is improving and your income is improving.
Actually, even though it is pretty unusual for a retailer to be aware of turnover, it should have been the reason you opened your store in the first place. Turnover, and your ability to control it, is what set retail apart from other investments, and retail is definitely an investment.
Once you understand how important turnover is, you need the means to control it and open to buy is the answer. Since sales and turnover are the two driving forces in your business, and sales and turnover are the two basic elements of open to buy planning, you can see that using open to buy planning gives you the ability to plan and control your turnover.
Retailing is a juggling act between sales and turnover. Of course, you want to maximize your sales, but if you keep enough inventory on hand to insure that you never miss a sale, you will be grossly over inventoried, have more invoices than you can pay, and will be taking huge markdowns on your inventory to pay bills. So, you must temper your sales with turnover. Simply put, “the more you turn, the more you make”. And retailing is about making money. So, you want to keep your sales as high as possible while constantly increasing your turnover. If you get into that rarified area where your turnover is too high and is beginning to jeopardize sales, you will simply dial your desire turn back a little until sales begin to grow again.
The easy way to have all of the advantages of open to buy planning is with myotbplan.com. The system is accurate, cost effective, accessible, supported, and guaranteed to improve your buying, inventory position, turnover and cash flow, or we’ll give you back your payments.
How much longer will you wait before you start adding the only information that will enable you to make money in your store?