Hey, it’s Halloween and I couldn’t resist, but still, it’s a valid question. You’re either moving ahead or falling behind. Sadly, most retailers only look at sales to gauge their progress, but you need to look beyond sales to your bottom line.
Sure, if sales are rising you’re doing something right. You’re buying the right items to bring in your customers and satisfy them. But have you overbought in order to do that? If you have, any profits from those sales will be lost in markdowns trying to rid yourself of the extra merchandise and to pay excess invoices.
One other thing to keep in mind as you go through the store marking down your bloated inventory is that those markdowns not only kill profits, but they also eliminate the contribution to overhead that you need to pay the rent, the help, and everything else to keep your doors open.
Of course you want to keep moving ahead, making money and enjoying all that retail has to offer. If that’s your view, you need to have a great “open to buy” system in place that will be guiding your buying to insure that you have the right amount of inventory in the right department at the right time to support your sales and constantly improve your turnover. Turnover is the way you make money in retailing. So your open to buy system must be based on sales and turnover to be constantly moving you forward.
If you’ve read my posts before, you’ve heard this before. If you’ve heard this before and you’re still not using open to buy planning, NOW is the perfect time to start. Open to buy works on a rolling 12 months, so no matter when you start you have your plan for the next year. And at the end of each month, you add another month on the end, so you’re always looking a year out. That’s because your suppliers are asking for long lead times to delivery.
Now is a perfect time to stop guessing about your buying quantities and move your store into profitable territory. You can do it. We can help! Just call.