Change is a word that is heard constantly, but are retail strategies enhanced to take advantage of these changes? Vendors, customers, competition and channels of business are constantly in motion and strategies should be reviewed regularly.
Merchandise planning might be one of the first areas to look for change. If plans for this year are still based on last year’s sales, it’s time to rethink practices. Bring the customer into the plans in order to assure success.
MANAGING BALANCE AND FLOW
Getting excited about customers and spending habits is a good strategy. One key to retail success is the balance and flow of merchandise. This directly relates to a challenge for most retailers, cash flow.
Once a purchase selection (balance) is lined up by class, vendor, price, size, etc. and the open-to-buy is matched to customer demand (flow), there will be a significant improvement in cash flow.
Retailers are constantly seeking customers who will drive their own traffic, regardless of location. After a financial plan is complete, focus on what will be the real key to success, product assortment. If the latest, greatest items are featured at the right price in the right size, customers will continually visit the store.
One fact that does not change either in fashion or basic merchandise is that 90% of merchandise sales come from products that are 90 days or less in age. Maintaining a fresh assortment will result in multiple customer visits. This hits the key to successful strategies, by offering balance and flow. Fresh merchandise will multiply traffic.
START THE SEASON EARLY
A strategy with proven results is to land a substantial part of seasonal merchandise early in the season. This will drive early season sales increases with higher margins. Then manage flow by setting and continually reviewing delivery schedules to match customer demand, to help increase sales and decrease markdowns.
Hard-line retailers need to experiment with key items that are readily available for reorder from suppliers. A smaller initial investment in an assortment of products that can drive customer interest can make more money through reorder capabilities. A supplier that is close to hand is a good strategy for today’s market.
The good news is that successes will be big for those retailers that have the right strategy and make the right decisions. Finish 2012 strong and add new customers that really do want to buy. Once the right strategy is in place, every decision is much easier to make.
Retail Smart Guys