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 firstname.lastname@example.org