by Ellen Lewis
I have been involved in the retail business in some capacity for the past 35 years. Manager, Buyer, Merchandise Manager and even Product Developer, It does not matter; the same skill sets are required.
To realize a profit, you must focus on the numbers.
The numbers reveal the entire profile and health of a business. I am often called by specialty retailers to come in and “fix” their problems. It amazes me, sometimes, when I visit small boutiques with beautiful displays and gorgeous merchandise in good locations and learn that they are not making money, or growing their business.
My first question is always, what financial and merchandising control systems are you using in your store?
Inevitably, the answer is either that they have one, but do not use it regularly or that they do not have one at all. And even those stores that have and maintain great analysis programs do not know how to “read” the numbers for hidden information. It is not just the facts that a basic report provides, but the hidden intelligence that can be found by digging into the details. I like to call this process “Retail Enlightenment”. The knowledge that is gained can unequivocally cause a Renaissance in a business. That is because the knowledge that is gained allows the smart retailer to take control of their inventory. Inventory control powers volume, cash flow and profit.
This process, by the way, is not a one or two day event. Another thing that I find perplexing is the retail owner who believes that all their issues are solvable overnight. The retail analysis processes require time. The systems need to be in place and the information must be reviewed regularly to determine trends in the business. Results can be immediate but substantial infrastructures take time to build. Like any well-built structure, there needs to be a foundation, framework and decor.
Start with the foundation.
The foundation of a healthy business is a well thought out inventory and sales plan. This should be done seasonally. In the Apparel business, the Six Month plan covers Spring / Summer and Fall/ Holiday. The Seasonal Plan outlines monthly sales goals, and stock levels required to achieve those goals. All orders are a direct result of these two numbers. Buying should be controlled by this information. If inventory is projected too high or too low for the next few months, the solution is simple. React in a timely manner.
The Seasonal Plan cannot be monitored unless there is a clear record of sales, receipts and outstanding orders. The management of this information is critical to the control of any business. This information should be defined by category, vendor, style, color and size. These are the “5 easy pieces” of Merchandise Analysis.
It’s all about a balanced assortment.
Once the assortment is correct, the proper analysis systems will allow a good entrepreneur to focus on the customer. Understanding and profiling the customer will inform sales. The customer is the lifeline of any business. Treating her with respect means many things, but critical to the bottom line interests is providing her with the product she needs. Know what she buys and why. Then, the retail seduction process begins. More about that next time.
Ellen Lewis is a 25 year veteran of the Intimate Apparel industry with expertise in both the wholesale and retail side of the business. An experienced merchant with vast knowledge of the lingerie market, as well the ability to analyze retail figures in order to position a store for long term growth, she can provide buying, marketing, sales and visual input. Visit her blog: lingeriebriefs.com/blog