By Abe Sherman, CEO BIG
It’s the second week of September and Christmas is coming. You have a number of opportunities to maximize sales and re-balance your inventories over the next few months to end the year in a healthier position.
Here are four things you should be working on this month:
Review your vendor list
Most retailers buy from too many vendors. If you run a vendor report you are going to see pages of vendors that have a few items in stock that are the dregs of whatever their inventory used to look like. Deal with it. Prune your vendor list. You should be concentrating on your top 20 vendors. By concentrating, I mean you should be analyzing them throughout the year, keeping their best-sellers in stock at all times and stock balancing with them as you go. When you establish a budget with each vendor, you have to agree to reorder and they have to take back some non-performing inventory, even if it’s at a 3:1 return. Just don’t wait until next year’s trade shows to do your returns…. And keep pruning that vendor list… keeping those who give you the best returns, margins and are the easiest to work with.
Analyze Q4 2016
Balance to Buy™ clients should all know how to run period reports. Analyze Q4 by category and price point. This is going to show you exactly what sold last year for the quarter and will help guide you as to where your current inventories may need to be adjusted. This is especially important to look at your top performing vendors by style during those months. You never, ever want to run out of your best-selling styles. And please don’t tell me you don’t want to carry the same thing that sold well because your customers expect to see something new! Oy.
Back up your best sellers
Did I mention that you never, ever want to run out of your best-selling styles? Some items are going to sell throughout the year. Others will sell only during the Christmas season, but you’ll be able to sell 4 of them in a month. You will never know if you can sell 4 of them if you only have 1 in stock, sell it and then don’t get around to reordering it until January. Or, you do re-order it (around December 10th) but your vendor tells you it’s going to take 6 weeks to ship it. Oy, again. When you look at your top performers, you should look at how they are doing over the past 12 months. If an item is selling throughout the year, even if it’s just for Valentine’s Day, Mother’s Day and Christmas, make sure you have some back up in December. I should also mention that some people look at fast-sellers (typically items that sell within 90 days) but when an item takes too long to sell, they drop it from their core assortment (or never-out) list. This might be a mistake if the item you are looking at sold in February, again in May, but sat until December. This could be a “seasonal” item and just because it sat from May through December last year, does not mean it should be cut from your inventory. In an industry where turn is .72, having an item that sells 3 times a year isn’t something we should ignore.
Use inventory from a discontinued vendor
Deal with it now by pulling all of their inventory out and re-merchandising that inventory into price points where you have holes and need to buy inventory anyway. Your best selling price points should be obvious ($1,000-$1,500!) and if you have the option to place any aged inventory into these price points, go for it. Doesn’t matter if it’s a diamond pendent, earring or ring, the $1,000-$1,500 range of prices almost always show up at the top of the list. If you have something you paid $800 for 4 years ago, re-price it at $1,195 or $1,495 depending on where you have the most holes in your inventory. Just sell it and move on.
So, pare down your vendor list; analyze Q4 by category and price point; move non-performing inventory into prices that have the most need for inventory and back up your fast-sellers and multi-sellers. There is plenty of time to do these things and September is a great month to do this work. We’re looking forward to seeing many of you over the next few weeks at our upcoming Plexus meetings.