It’s no surprise to retailers that there are not enough hours in the day (or days in the week) to take care of everything associated with their stores. But does it have to be that way?
On the most basic level, retail is about buying and selling. Selling takes into account your store, rent and all overhead including staff. That in itself is a handful, but once in place should be pretty stable. Of course, motivating your staff is always a challenge, but in that area, you should be looking for, hiring and rewarding only the best as they are the face of your store – the first to greet your customers and the last seen as the customers leave. Having the right personnel solves many problems.
The other end of the spectrum is buying. For most retailers, buying is a constant dilemma. What to buy, from whom, and how much? If the buying is done properly, everything after that pretty much falls into place. But that is rarely the case. The majority of retailers I have spoken with find all sorts of excuses (none valid) to avoid dealing with the only correct method of planning their buying – open to buy (OTB). How can they possibly focus on OTB when there’s so many other things to deal with? But think about it for a moment, if you bought the right items in the right quantities for delivery at the right time, wouldn’t your retail life be substantially less chaotic?
Most retailers are under siege because of money. Money to pay invoices, money to pay overhead, money to pay salaries. There can be many sources of these cash flow problems, but for the most part they appear as invoices for excess inventory that was bought without a plan rolls into the store. So, to raise money to pay these invoices (and all of the other bills), retailers chronically turn to markdowns, or find sources of outside cash. Neither of these options is a solution.
When any store begins, there is an investment in the physical store (furniture and fixtures, leasehold improvements, etc.) which is, in reality, money thrown down the drain – but with a purpose. That purpose being to provide a desirable environment in which to sell merchandise. The other investment is in merchandise and if planned properly, that investment should carry the store indefinitely while providing you with ever increasing profits. So, why doesn’t it work out like that?
The obvious problem is the opening inventory. If not planned and bought based on anticipated sales and desired turn rates, it will be wrong. And it won’t sell as hoped. But the bills still accumulate, so you try something else.
OK, here’s the punchline to all of this. If you start with OTB to plan your first inventory, and all of your successive buying, you will always be on top of your game and experiencing a positive cash flow. That means paying your vendors on time, paying all of your overhead and constantly enjoying the fruits of your labor in terms of profits.
On the flip side, buying without OTB always leads to chaos. How can you expect to have the right amount of the right items in the right department at the right time without an OTB plan based on anticipated sales and desired turn rates? You cannot. So, the question is: how long are you going to wait to get an OTB plan in operation in your store? There’s no time like the present and (in all modesty) there’s no OTB plan as good as myotbplan.com.
Of course, if you’re too busy . . .