If you were to magically sell every SKU in your store tomorrow, what would you replace them with? While you’re never likely going to have a totally clean slate, you can take the first step of creating a merchandising strategy, and, later a merchandise plan.
A carefully crafted strategy will deliver revenue growth and profits and secure your competitive advantage. It is the difference between having a vague idea where something is versus using GPS to get there.
PART 1: YOUR MERCHANDISING STRATEGY
A merchandising strategy defines a company’s future plan in terms of what you want your assortments to be, regardless of what you currently have in stock. A merchandise plan then articulates your desired outcome by product groups — revenue, gross profit percentage and dollars and inventory turn. Tactical actions are necessary for the day-to-day running of a store or to stay afloat, but strategic actions are the ones that ensure a thriving future.
Now that you are in a strategic frame of mind, start asking yourself questions about the vision for your store, and the merchandise required to get you there:
- Do I want to expand my bridal clientele?
- Do I want to attract the female self-purchaser?
- Do I want to resonate with the Gen X and Y consumer?
- Do I want to carry sterling silver, vermeil or even accessories?
- Do I want to reduce my margin percent, but increase my margin dollars?
- Do I want to adjust the percentage of designer inventory versus in-house branded?
Once you have articulated your strategic goals, make sure they are SMART: Specific, Measurable, Achievable, Realistic and Time-dated.
A non-SMART goal might be: “Expand my bridal business,” while a SMART goal could be: “Expand my bridal business by 30 percent over last fiscal year by creating three in-store branded collections by March, targeted to entry level price points of $1,000.”
With strategic goals established, step back again and compare them to your overall metric goals — revenue growth, margin percent and dollars, inventory turn — and ask yourself, “Will these goals get me there?” If you are comfortable that they will, then you will be ready to flow them into your merchandise plan. Stay tuned for The Merchandising Plan!