As the year draws to a close and we put our stores back to some semblance of normalcy, what would you like to change for 2013? Your personnel? Your displays? Your advertising? Your store layout? Your POS? There are so many ways to improve the way you run your business, so where do you start?
The way I see it, you start at the bottom. Bottom line that is. The reason you opened your store was probably the wrong reason. Most retailers love their product and so they open a store to deal with it. Passion is great, but it only goes so far. The reasonable reason to be in retailing is to make money. While that sounds a little cold, consider how much you have invested in your “passion” and what has it returned?
So, once you realize that the merchandise you love having in your store is actually your invested capital, you can begin to put some distance between yourself and your passion and start to make better decisions. Now in no way am I inferring that you limit your creativity (or even your passion), I am suggesting that you treat your store more as a business than a hobby.
Every business exists for one reason. To make money. That should be the driver with your store as well. And the one thing that sets retail apart from other businesses is your ability to turn over your invested capital almost as frequently as you desire (within limits of course). So, the question is how do you get your invested capital to turn over more frequently. The answer is open-to-buy (OTB) planning.
With OTB, you will be able to schedule the flow of merchandise into (and out of) your store based on turnover. Your goal is to constantly increase your turnover until your inventory begins to limit your sales growth. So it is a bit of a juggling act, but very few retailers have gotten to that point. If you should, it is very easy to dial back your turn rate, increase your inventory and watch your sales move up again.
The OTB buying plan that you will create is a function of anticipated sales and desired turn rates. This planning out 12 months into the future is absolutely necessary since your suppliers are requiring that you place your orders from three to 12 months into the future. Without this planning you’re simply guessing, and that never turns out well.
So if this sounds good (and it is), make your New Years Resolution to help your store make more money with OTB. And if you want the easiest, best, most accurate, most accessible, best priced open to buy available, you’ve come to the right place. Happy New Year!