If you’ve been in retail longer than a week, it’s likely you’ve been to one or more retail market. Of all things in retail, the market is one of our favorite things to be a part of. Obviously, there are the endless free mimosas, but more importantly, retailers get to connect with one another, gather insights into the latest trends, and purchase the inventory that’s going to fuel their business in the coming months and seasons. Needless to say, the time you spend at the market is incredibly important.
Regardless of which market you attend, we can all agree they can all be overwhelming. Whether it’s the countless floors in Dallas or Atlanta or the massive convention centers of Magic in Las Vegas, it’s certainly a lot to take in. For many retailers, making the most of these trips can be pretty difficult. Of all things we see that successful retailers do on these trips, there is one common denominator.
Planning.
Whether it’s planning their time with vendors, planning which halls (or floors) they’ll go to on certain days, or what they plan on buying, successful retailers create a plan.
Today, we’re sharing three reports you can use to help you plan your buying into the coming months and seasons. Though open-to-buy strategies can get confusing, there are some simple things you can do with your retail POS to make your next trip a successful one.
Sales by Category
When you’re setting up your point of sale solution, you were given the option to set up categories and potentially sub-categories. This could be things like “tops” and “denim”, or “tables” and “seating”, all depending on your industry. If you haven’t set these up yet, we highly encourage you to read more about how to do that here.
If you’ve already set this up, this is going to be an incredibly useful tool for you. Sales by category shows you:
What type of products is making up the largest chunks of your revenue?
Which one of your categories is the most profitable and are fueling your cash-flow?
What categories of products aren’t moving as quickly?
Taking this information at face value, you can make sure enough resources are set aside to invest in categories that are fueling your business both in terms of revenue and profit.
If you’re seeing low margins that you think should be higher, it’s a great opportunity to review your markup and markdown strategy to make sure you find the margin your business needs to succeed.
Assets by Category
Knowing your sales only gets you pretty far, but understanding what inventory you already have is equally important in creating a useful plan for what to do next.
In this case, what you need to do is take a look at how your assets break down on a category basis. A good POS system will give you a clear picture of both your assets today and historically. This is useful when trying to determine inventory turn or to see how your inventory stands in comparison to different periods.
Time of Supply
It’s likely you’re used to talking about inventory in terms of cost, retail selling price, or SKU count, but for planning purposes, it’s easiest to think of your inventory in terms of time. When we view things in terms of time, we can combine what we know about our sales and our assets in a way that shows us where we are significantly over-stocked or under-stocked.
To do this, we want to calculate what we call time of supply. Time of supply means the amount of time that your current inventory levels would last based on your average sales per month (assuming sales continue as expected). To get that, use the following formula:
You might see a problem there. Sarah’s Boutique is severely overstocked in dresses, and equally understocked in denim. With this information, they can increase their markdowns on dresses and plan to purchase more denim as soon as possible.
Something is better than nothing
For many retailers, the idea of creating a plan or using equations might seem daunting and near impossible: you’re not alone in that feeling. As you continue to grow your business, the important thing is that you let the data provided to you by your tools inform your decisions more and more each season.
Today, it might simply be reviewing your sales data to see what categories make you the most money. As you scale, you can learn more and more about how to use the tools at your disposal to grow your business. The most important thing to keep in mind is that you have to start somewhere, and something is always better than nothing.
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