Before you start purchasing, dive into reports to build a foundation for your buy plan. Look at what percentage of your total inventory is over 12 months of age. That is your report card on buying in the past. Depending on what it shows, it may be time to try a different approach.
The first step is to review your strategic plan and your merchandising plan to refresh your memory as to your objectives. Then brainstorm with your staff on unclosed sales and missed opportunities.
ASK YOUR TEAM THE FOLLOWING:
- When were you unable to close a sale because you did not have the right product?
- What was not “right” about the product you carry — was it styling, quality or price point?
- Is there a brand that you have had repeated (this is important, you don’t buy product based on one client) requests for?
THEN, ASK YOURSELF THE FOLLOWING QUESTIONS:
- What is my open-to-buy (OTB) dollars by classification of product?
- What am I trying to accomplish in that particular department — to close sales, build profitability, increase my average sale?
- What should the product look like?
- What price-point range do I need to fill?
Another good source of information is your vendors. Call your top vendors and ask about what other retailers are having success with. Or, have them send you pictures and prices of their top selling 25 styles. If you have Edge Pulse, you can also use AdvantEdge, which shows actual sell-through data from close to 1000 stores. If you don’t have Edge Pulse, please reach out for more information!
With your OTB by classification, make sure that you allocate a percentage to replenishment. It should be at least 25%, but could be as much as 50%. It’s critical to have dollars available to fund fast sellers.
Also put aside money for pending accounts payable, consignment sales, and other similar financial obligations.
With your net OTB by classification, start running reports to see what your top selling styles are, and just as importantly, your aged inventory. You don’t want to repeat buying missteps. Get a visual picture of what is working and what is not.
Get very specific. If you have determined a need for bridal semi-mounts — drill down in your reports — what metal, shape melee, head shape/size, price-point range? Within that classification, what price points do you need to hit? An example item on your buy plan might be: Semi-mounts in platinum, with round pave melee, three-quarter carat princess head, with a cost of $1,200 to $1,500.
Remember that new doesn’t have to be brand new. New purchasing is high risk. Lower your risk by leveraging your top selling product — is it available in another diamond total weight, with a different size/shape center stone, in a different metal?
If you would like more information or strategies on this topic, contact us! The Edge Retail Academy is a highly effective jewelry industry consulting company that provides customized strategies for retailers and vendors to increase profits, optimize growth, reduce debt, create profitable inventory solutions, build effective teams and enhance brand loyalty and profitability. The Academy is committed to helping jewelry businesses improve their bottom line while reducing uncertainty and stress. Edge Retail Academy software and the unique talent pool of their business advisors provide real world knowledge and advice for guaranteed results, all on a “no-contract” basis. 877-569-8657, ext. 1, Becka@EdgeRetailAcademy.com or www.edgeretailacademy.com