Black Friday started in the USA and now it has become normal among most UK retailers.
When you have more items on sale rails than on the rest of the floor, there are a number of things you can do, however, rolling your eyes and blaming the increasingly unpredictable British weather shouldn’t be one of them.
The only rolling going on should be you rolling up your sleeves and taking serious action. If you want to make more money from your stock, it’s time to start working in a different way.
Please note that the comments below refer to a multilabel store however the logic applies to all mono brand stores.
1 KNOW YOUR NUMBERS
In order to avoid discounting, you need to understand what you are selling each month: what are your best sellers and where are the problems in your shop? I spoke to a retailer recently who told me his best selling category was dresses. When I asked him what sort of dresses, were they long or short, occasion wear or more casual, he couldn’t tell me.
Without the numbers at your fingertips, there’s not much you can do to reverse a downward trend.
Would you be able to tell us how much discounts you give away every season and every year in value? Over 50% of independent retailers fail to give us a value. And if you cannot measure it, you cannot fix it.
2 EACH PRODUCT CLASS HAS ITS OWN TREND
If you are discounting too much, you are probably overstocked in some areas. You need to to take action and understand exactly what is happening with your sales by product class. Each one will be reacting differently and you need to have a discount strategy per class.
3 HAVE AN EPOS & TRACK THE RIGHT DATA/REPORTS MONTHLY
If you have an EPOS system, do you know how to use it in order to be able to pull off figures by type of goods sold? If you have any doubts, call the people who sold you the system and find out how you can get some training on this.
In 2 hours, we can show you what data to enter in the system and how, what reports to look at and what should be the action plan.
4 WORK BY PRODUCT CATEGORY
To gain a clear picture of what you are selling, you need to divide your stock up by class of goods and follow each class month by month. For every type of goods, say dresses, you need to further divide this into as many groups as possible, e.g. short; maxi; occasion; with sleeves; without sleeves. If you are looking at trousers, don’t forget to divide these by jeans, chinos, smart, casual etc. Menswear specialists may also need to divide trousers according to fabrics.
5 TRACK PRODUCT CLASSES THEN BRANDS – NOT THE REVERSE
Many retailers believe that their goods should first be analysed by brand and then by class. However, this can be misleading: after all, customers will generally buy by type of garment first and only then by brand.
No store will keep all brands for ever. No brands are hot for ever. You want to collect data that makes sense for your customers and your store.
6 BUY OFF PRICE GOODS
You always need to refill the store in the second half of the season as the right styles, colours and sizes are gone. It is the perfect time to order end of season goods or off price goods at minus 10 to minus 50%.
See how this will improve the bottom line even during the sale.
Very frequently, we have retailers complainng during the sale period: they’re covering the cost of their goods but not making enough to pay the other business expenses (rent, salaries, marketing etc).
7 FORECAST SALES PER MONTH PER CLASS
This approach to sales monitoring and sales forecasting is known as an Open to Buy (OTB) plan. It is used by most major chains but is equally useful for smaller independent retailers. The majority of our Open to Buy clients have only one shop and their total annual sales are usually from £200,000 to £500 000. However small your business, you can use this tool to improve your profitability and the return on investment can be 3 to 10 times what you invested.
A £5000 buying difference between what you bought and what we would have said you should buy can pay for the OTB plan or merchandise plan for the next 12 months!
8 USE A MERCHANDISE PLAN OR OPEN TO BUY PLAN
The Open to Buy approach enables you to control your buying budget more effectively. It shows you where you are overstocked and where you are understocked. This means that you can top up with goods during the course of the season, helping you to make more money. Even when discounted these goods will help you maintain a healthy margin.
Within 6 months of tracking your sales data like this, you will have a much clearer understanding of what is happening in your business. It will help you to plan your buying budget and to handle it more effectively.
9 WORK WITH IN-SEASON DELIVERIES
If you normally only buy by forward order, you may need to discuss also buying stock in season with the brands you use. If they are not open to this approach, you may need to find additional brands who will be able to meet your in-season needs.
10 ADOPT CHANGE REGULARLY OR HAVE A COACH/ MENTOR
Be prepared to change the way you work to meet the changing needs of your customers and your business!
Set up measurable goals and deadline. If you cannot meet them, then it is time to work with a mentor, coach or sounding board … or call us!
NEED IMMEDIATE HELP TO IMPLEMENT THE ACTION PLAN, CHECK THIS TODAY.
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