Retail Businesses Need a Proactive Action Plan

I heard a joke the other day, it goes like this: Do you know how to make a small fortune in the retail business? Start with a large one! I know, it’s a real knee-slapper, right? The only problem with this joke is that if it wasn’t so shockingly true in all too many cases, it just might be funny. How many retailers do you know where this scenario applies? Perhaps you are even one of them. If so, ask yourself the following questions: How did you get into this position? Why are you content staying in the situation? What steps might you be able... 

Good vs. Bad Retail Business Practices

Today’s lesson is about breaking bad habits and replacing them with good ones. Life and retail are habitual; we tend to do the same things over and over, repeating daily, monthly and even seasonal activities. In retail, habits good or bad, make your store what it is. If you recognize what behaviors need to be changed, then even a small effort can create big changes. Bad Business Habits Stop blaming the economy and the competition. How is it that some retailers are thriving and growing in this down economy? How is it that some retailers thrive... 

Improving Cash Flow

Strong, positive cash flow is a must for any thriving retail establishment. The benefits of positive cash flow are numerous: pay vendors on time, take discounts, expand or remodel, add brands, pay yourself more, and so on. Poor cash flow, however, forces retailers to make survival decisions they may otherwise not make. This is what I commonly refer to as, Management by Crisis. Decisions made during periods of difficult cash flow might include not taking discounts, paying vendors late, paying COD for inventory, not taking entrepreneurial risks that... 

How to Improve Cash Flow

Let’s begin with a simple multiple choice question. What helps to improve cash flow? A. Reduce expenses; B. Increase sales volume; C. Improve inventory turnover; D. Raise maintained markup; E. Properly timed deliveries; Or, F. All of the above. If you answered “F” congratulations, you are probably a savvy retailer. Cash is King in the retail business. Strong, positive cash flow is a must for any thriving retail establishment. The benefits of positive cash flow are numerous: pay vendors on time, take discounts, expand or remodel,... 

Off-price Buying: Strategies and Pitfalls

Many retailers spend more time planning their vacations than they do planning their inventory. Of course I can’t prove this, but it stands to reason given the fact that the average shoe store still turns inventory twice annually and is accepting of a gross margin return on inventory (GMROI) of less than $2. If we accept as fact that proper inventory planning is a key component to maximizing profitability, it makes sense that more time spent planning would lead to increased profits. Given that most open-to-buy dollars are allocated to initial or... 

The Importance of Proper Timing: Setting up Inventory Deliveries

As the saying goes, “Timing is everything.” Although selecting the right vendors and styles at the right price points is very important, establishing ideal delivery start and completion dates for inventory orders can be just as important. Before buying for any new season, you need to know which vendors have been the most profitable, along with what styles and sizes sold best in the prior seasons. No doubt you know which lines were not profitable and which items didn’t sell. But was the lackluster performance for these items really a result... 

A New Year’s Retail Resolution

Why do we go through the charade of making idol promises to ourselves each year that are usually dismissed or forgotten by the time the effects of New Year’s Eve have worn off? Have you ever noticed all the new faces in the health clubs in January, sporting the cross trainers and workout wear acquired over the holidays? Most will have abandoned their physical aspirations come spring. Making resolutions for the upcoming year is a time honored tradition with roots tracing back to Babylonian times.  In 153 BC, Janus, the mythical King of early Rome... 

Inventory Variance

With the Holiday season soon behind us, now is a good time to review the past twelve months and evaluate both quantitatively and qualitatively the areas of your business that have worked well, in addition to those areas that could stand improvement. Most retailers take a physical inventory in conjunction with their fiscal year end.  Certainly this is a recommended practice from an accounting perspective.  From an operations standpoint, the benefits of a clean and thorough physical inventory are numerous. If for example, a physical count is taken... 

The Power of New: Fresh Merchandise Means Better Sales

What sells the best, fresh merchandise for the upcoming season or leftover inventory? With even a remedial understanding of the concepts of turnover and gross margin return on investment (GMROI), it should be easy to determine that new goods always trump old merchandise when it comes down to what will sell the fastest. The longer an item remains on the floor unsold, the more it costs you. Not only in real dollars, but in “missed opportunity” costs. In the past, I have discussed both turnover and GMROI in this column, so I thought we... 

Understanding Open to Buy Planning

Given the current state of retail, it was suggested recently that I write an article about open-to-buy (OTB) planning.  My original reaction was who wants to read about that? However, after reviewing previous articles, I noticed that I have covered almost everything, but open-to-buy. since I work for a company that provides independent retailers with opten to buy plans, I guess it might be about time. I am going to let you in on a trade secret: the formula for OTB is not difficult.  Begin with planned sales, determine the first of the month inventory... 

Next Page »