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Get rid of that stale, dead inventory, and plan your future purchasing through Gross Margin Formula.
Have you ever asked yourself, “If business is so great, then why am I not making any money?” Maybe your accountant or tax return says you are making a profit, but it’s not reflected in your bank account. This is because you are not managing your inventory! As an Independent Retailer, you must be concerned with cash flow and cannot afford to sit on your inventory “hoping” to sell it.
You must Focus on having
The right amount of the right product at the right time.
This is the goal of an Open to Buy System.
“Your inventory is the lifeblood of your business. And you need to manage your inventory like your business depends on it – because it does.”
Susan Negen
To know your dead inventory, you need to know your Turn Rate and Sales Projections.
Do you have a system for knowing how long an item has been on your floor?
Your Merchandise Should Never Have a Birthday. If you have anything that has been in your store for over a year you must move it. Your store is not a museum.
Quick Tips on Moving Out Stale / Dead Inventory:
- Good, Old-Fashioned Clearance Section
- Mystery Bags / Boxes
- Facebook Live
- Targeted Facebook groups
- Sell on eBay or to a Consignment Store
- Donate It
- Don’t have Stale Inventory at All! Focus on Sales Training and emphasize Suggestive Selling and Adding On
Planning your future purchasing
You need to know how much inventory you have on order by department and how much inventory you have in stock by department. The Retail Clarity Management Spreadsheet that Calculates your Open to Buy will have this information at your fingertips.
Now, Rank your Top Vendors by Gross Margin $ and Gross Margin %
I know I have stressed you need to calculate your Turn Rate by department. But, if you have a vendor that does a large percentage of your business, then you need to calculate the turn rate for that vendor as well as your departments.
Continue to seek out new products for your store’s assortment. You might want to join a buying group for your industry to share product ideas with and combine your buying power for better discounts and dating. If you are not familiar with a group for your type of store contact me and I will connect you.
But The Most Important Part of figuring out your Future Purchases is knowing your budget by department by month.
Remember:
The right amount of the right product at the right time.
This is the goal of an Open to Buy System.
