• Joanne Neidorf

Actual Decisions / Actual Costs

Have you ever stopped to think about how many decisions a retail buyer or merchandise planner has to make every single day... or week.... or season? And how much impact these decisions have on the growth and profit of their business?

These include both tactical decisions on:

  • Which items to buy

  • How much to buy

  • How to move the product from source to customer

  • How to use events and promotions to drive traffic or sales

  • How to present the product to the customer

  • When to markdown

And strategic decisions on:

  • Which business growth opportunities to chase

  • How to drive profit

  • How to avoid risks

These are very real decisions, with real consequences.

Here are just a few examples of some poor decisions I've seen from my years working in retail buying and planning:

Bringing in a year's worth of stock to obtain a container-load discount

Cost: 40K of unneeded inventory + inventory holding costs + increased damage/write-off cost

Under-purchasing top-selling Back-To-School items combined with an equal allocation to all locations, resulting in early stock-outs in key locations


Cost: 300K in missed/lost sales




On the flip side, good decisions and follow up can drive immense value:

Expanding an apparel private label brand into handbags

Benefit: 800K in incremental annual sales at a higher margin than the branded handbag business

So how do you increase the chances that your buyers and merchandise planners will make good decisions and avoid the bad ones?

Retail is a complex environment - you can't be prescriptive in dictating what the "right" decision will be because you can't anticipate every scenario and circumstance.

But you can teach your merchants and planners "how to think" in a way that gets them to ask the right questions, gather the right data, generate lots of options and then understand the impact of their decisions so that they will consistently make better decisions for their business.

Merchant Academy has been designed to develop these critical merchant thinking and decision-making skills for everyone in your buying and planning organization.

For more information about Merchant Academy, please email us at info@merchant-insight.com