Many retailers feel that adding another monthly expense will “sink their ship”. And they might be right. But it really depends on what the expense is and whether it will return more than the amount of the expense.
Monthly expenses are a part of any business and especially retail. You have to pay the rent, utilities and personnel if you want to keep the doors open. Just about everything you do to make your store more attractive to your customers will be an ongoing expense. And don’t forget your efforts to get those customers to come in. That can be very pricey.
And what are they coming in for? Your merchandise. So how do you determine what merchandise to have and, more important, how much. In order to do this properly (successfully) you’re going to have to add another monthly expense. But this is one expense that pays for itself and returns a greater sum than it costs. But it requires letting go of a little bit of ego for retailers because it’s admitting that you cannot do this in your head or even with reports from you POS.
I’m talking about open to buy planning and specifically myotbplan.com. It costs to use it, but anything worthwhile will have a price tag. This critical merchandising tool will pay for itself simply in the markdowns it eliminates. But wait, there’s more! How much is the time spent dealing with markdowns worth? Going through inventory, changing tickets, dealing with accounting and unhappy customers and of course, the elimination of any profit or contribution to overhead when the discount is taken. If myotbplan.com can eliminate $500 of markdowns a month is it worth $150/month? You do the math.
Turnover is the key to making money in retail. Markdowns don’t help turnover. Markdowns help to get rid of merchandise, but without profit or contribution to overhead. You want to keep your inventory as low as possible to achieve the maximum sales and the highest turnover. It’s truly a balancing act and requires open to buy to stop from falling off the high wire. You wouldn’t consider walking a tightrope without something to aid your balance, but retailers are constantly doing this with their merchandising. And why? They think they can do it in their head! They can’t.
There are expenses you can live without. Open to buy is not one of them. If you’re not using open to buy planning to guide your buying, you’re not going to get it right. myotbplan.com guarantees that you will be right on target with your buying if you follow the plan that is developed specifically for your store. It’s one monthly expense that will actually result in more income than out go.