About a year ago, as the pandemics were beginning to hit their stride, we introduced a framework for retailers to "rethink your merchandise mix."
As depicted in the chart above, we cautioned that once the lockdown was over, as customers resumed shopping, retailers should be prepared for (1) reduced sales totals overall; (2) significantly re-balanced merchandise mixes, initially dominated by "basics/never-outs."
Further, we anticipated that the merchandise mix would continue to change as we re-emerge from the effects of the pandemics. And we urged retailers to take this overall construct and adapt it to their own situation; to develop their own customized strategic response.*
Now, one year later, here's how this can become "news you can use" to quickly produce your Big Picture buying plan. Especially in the spring of 2021, some practical answers to "What to buy?" , "How much?" and "When?" are likely to be very welcome.
Start by looking at 2019's results, and dial them back for this year. 60% of 2019? 75%? Be as realistic as you can. Remember, shoppers want to buy closer to need.
Next, a critical step: nail down your assumptions about the MERCHANDISE MIX you will need. Don't be shy about your assumptions; be strategic!
Now, put these sales assumptions into The ROI's online Multi-Department Open-to-Buy Planner.** Here's the key: for this first draft, call one department Basics, and enter the expected sales, based on your assumptions. Do the same for the next two "departments," Expanded Basics and Discretionary.
Then, without bogging down, enter your best guesstimates of expected margins and turns for each category, and an estimate of how much of your inventory @cost is in each category to start. Close counts!
Immediately, for each of these categories – Basics, Expanded Basics, Discretionary – you have a monthly inventory buying budget. These OTB plans become the strategic guardrails for you and your buyers.
See how empowering this is? This unique online "calculator" is a tool developed specially for owners. It enables you to quickly develop a strategic game plan for your store, all on your own. Take advantage of this time-saving and retailer-friendly way to be more strategic.
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* (For more about this, see New Dynamics of Merchandise Mix and/or Ready? New Five Stage Merchandise Mix for the "New Normal" )
** Unlimited access for ROI Members
Alas, there is really no way to avoid discussing COVID-19, the coronavirus that began in China last month, and now continues to spread throughout the world. No matter whether or when it is officially declared a "pandemic," the uncertainty and angst that it is generating have troubling implications for retailers.
We often caution that many vendors are so much better trained at selling than retailers are trained at buying. In their eagerness to grow sales, and the associated promise of thereby growing profits, it is all too easy for retailers to become overbought. Instead of higher profits, they can find themselves in a cash flow crunch. And that was in Before Times, before the pandemics. Throughout 2020 and continuing now, vendors and retailers alike have increased their online capabilities. Ordering online brought new challenges to buyers and sales reps, but also saved time and improved access.
We have applauded these advances in technology, but...
Throughout the pandemics, many independent retailers successfully shed their "technology laggards" label, as they pivoted to embrace an array of digital tools. Yet going forward, it is well to keep in mind what really matters to the customers. And it may not be more technology. A recent survey* of more than 2,000 customers provides some interesting insights as to who shops where, why, when and how. It especially highlighted the differences between "large stores" and "smaller stores" (or as we view them, "specialty stores.")
Hmm. This suggests to us that shoppers essentially are treating large stores the same way they treat the internet:
As we get ready for the New Year, and the post-Holiday season slowdown settles in, here's a positive way for retailers to re-energize and re-focus their entire organization, whether one store or even a hundred. We learned this from one of our clients with nearly 50 stores widely scattered over 6 states. Each day, without fail, they would take time for what they called the "Corporate Cheer." You will see how it can be a fun addition to any retail business, no matter the size.
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