For retailers (yes, you), the most fun way to buy is to just buy… and then buy some more. You know your customers and what they like. You know your area and what you need. So, go ahead and buy. You’re going to pick the best available merchandise, so just buy.
Man that sounds like fun, right. But there’s a problem. The biggest problem is that all that great merchandise comes with invoices. Talk about buzz kill.
When the merchandise rolls in your back door and the cartons are opened, there’s the same excitement you felt when you saw it the first time and placed the orders. When it hits the sales floor, there’s another round of euphoria. But what happens if you don’t sell ALL of it?
Every store has a certain amount of sales capacity. Sure, we keep trying to push it up with our promotions, displays and buying. But if it’s going up, it will inch up, not jump up. That’s perfectly fine, if your buying does not outpace your selling. The only way to make sure that your buying supports, but does not exceed your selling is to use open to buy planning.
Open to buy begins with your sales projections. Figure out realistically how much business you expect. That’s much different from how much you want, so keep it real. The other factor that must be considered is turnover since that’s how retailers make money. The more you turn, the more you make. A good open to buy plan is built on the sales you expect and the turn rates you want to achieve.
And, the truth is, open to buy does not take the fun away from buying. Actually, it makes your choices better since you are limited in your amounts and it reduces markdowns because your making better choices and buying the right quantities. So, let 2017 be the end. The end of overbuying, bloated inventories, excess invoices, and unending markdowns.
Once you come to the end, you’ll be at the beginning of well planned buying and profitable retailing.
