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Retailers: Don't let this common mistake haunt you

We’re transitioning from one season to another. Changes are happening all around us: trends, temperatures, sleeve lengths, daily habits, fiscal priorities, what customers purchase. As a retail shop owner, we lead the charge in what consumers buy.

But what happens when we end the season with too much merchandise from last season? How did we get here? What went right? What went wrong? How can we prevent this from happening again?

We’ll explore the good, the bad, and the ugly of putting our small business through this situation.


How did we get here? We’re in the business of selling travel gear, equipment, outdoor staples, tents, hiking pants, kayaks, shoes, sandals...everything that our active clients could ever ask for! It’s our job to be completely stocked and equipped to take care of their every need, situation, and request. We’re prepared, locked, & loaded for a successful season of selling merchandise that makes our customers happy and satisfied and returning for more. We have all the merchandise that our hearts desire because we need to be the resource and the GO-TO shop in the area. And we can’t afford to lose a sale or lose our reputation because we don’t have a standard piece of equipment. We have to have the merchandise in stock in order to sell it!


Let’s review these statements. And remove the mentality of having everything--just in case there is a need. Let's start thinking about these, truly unseasonal, items as leftovers? Come on, let's call a spade a spade, right?! My mind imagines a doomsday prepper with a hoarding tendency. I might be prepared for everything, but it might not be the best for business.


Let’s continue down the path we’ve created for our store. We’ve received ALL the merchandise and the end of the season is nearing. Maybe the weather has turned from pleasant to uncomfortable or conditions are worsening and the peak active season has passed. Identifying old, seasonal merchandise is pretty easy...especially on trendy or weather-dependent merchandise. Think tank tops, down parkas, sandals, insulated boots, hammocks, gloves, foot warmers.


Leftovers of this type of trendy and weather-dependent merchandise gets stale faster than bananas in the sun. I know retailers that give up on merchandising these things on the sales floor and put their inventory investment in the BACK ROOM so it can sit there, collecting dust, not making them money. So...how did we get to the point of having so much stuff leftover?


Reason 1: Sales were soft

Sometimes sales are just soft. Sales can be lower than we conservatively planned for, for a number of reasons. We’re always quick to blame the weather, but maybe there was a natural disaster, the political climate was charged, or maybe your town experienced an economic downturn. Sales can be soft, and that’s okay--as long as we react. We can react in a handful of different ways that we’ll discuss later.


Reason 2: Sales forecasts were too high

Forecasting is an important and vital part of envisioning what the future is like for our business. Yes, we need to think positively and I am the first one on the self-manifestation bandwagon. But are you pushing forecasts so high that sales goals are unrealistically high and unattainable? Are you creating a future that’s objective and accurate?


Your buying budget is based on your sales goals. If sales goals are unforgivably-high, then your buyers are spending a lot of (READ: TOO MUCH) money on their preseason purchases! There is an art in forecasting sales precisely, and that’s something that we do in our consulting packages at Outside Looks.


Reason 3: We didn’t consider existing inventory

As an outdoor retailer, there are many pieces of gear and equipment that carry over from one season to the next. Prior to receiving the next shipment of merchandise, we should evaluate the existing & related inventory. Do we have enough? Do we need more? Do we need to discontinue something and put it on sale? We should not receive carry-over merchandise blindly, without analyzing the existing assortment and forecasting the upcoming needs from consumers.


Reason 4: We follow someone else's lead

MAP policies are strict and highly enforced, and for good reason! These policies unify our efforts and keep pricing fair in the marketplace and across all types of retailers. As a loyalist to the industry, our consultancy encourages our clients to obey the vendors’ rules and requests. We also encourage our retailers to do what’s best for their customers, their business's bottom line, and cash flow (just like our brand partners do too!)


Just because our vendor keeps a down jacket around all year at MSRP doesn’t mean that we as retailers need to stock that item all year. One of our retailers in Florida keeps down vests around for 3 months--no more, no less. Because that’s best for his business and for his investment on this seasonal piece of merchandise.


Reason 4: We didn’t manage inventory properly

Do you have a clear system for receiving? Invoicing? Purchase order management? There are a lot of moving pieces, and it’s easy to get double-shipped on accident or for a preseason order to arrive un-revised. AH! Processes, tools, and accountability are your friends in managing an intense operation.


There are ways to manage this! We’re releasing order management tools soon! Email carrie@outsidelooks.com to get on the wait list for this free tool.


Reason 5: We didn’t have the right product

Sometimes we buy duds. And that’s okay! As buyers we are constantly taking risks, calculated risks, but still risks. Maybe our customers were expecting something different from us. The takeaway here is to realize what’s happening, to understand feedback, to take action on the duds, and to make changes and improvements for next time. Most importantly, take action ASAP. Don't wait until the end of the season to do something about it.


Reason 6: We didn’t react

The most important reason of all. We didn’t react. All previous reasons can happen to a perfectly seasoned, well-prepared, buying team. No matter all the planning, prep work, and dedication we show to managing inventory and merchandise, we can still mess it all up by not reacting to what’s happening around us.


Ways to react:

We can react to overall soft sales/aggressive sales goal by running a promotion to increase sales. In conjunction, revise down future purchase orders. By lessening the amount of inventory flowing into the store, we’re lessening the amount of cash spent on invoices and the pressure to push sales, potentially at a lower margin. By reacting in this fashion, our inventory levels will stay more consistent and important KPIs like GMROI, margin, average inventory, and turn will stay strong.


Create a product assortment that is relevant to your store and your customers’ REAL seasonal needs. Don’t carry something if you’re going to sell just a few units of it during the next 6 months!


React to duds: if it’s peak season and your customers aren’t gravitating towards certain items, REACT! While traffic is still strong, react to dud products by putting it on discount. An in-season discount capitalizes on peak traffic patterns and exposes “ew” merchandise to more people, resulting in the likelihood of purchase! If we can get the right product at the right price at the right time, our customers will convert. It’s risky to hold out until the end of the season just to attempt to save a few points of margin. CASH (now) IS KING for a reason, compadres!


Most importantly, receive the right amount of merchandise. Receiving the right amount of merchandise, at the right time, in your selling season is going to make all the difference! By receiving exactly what you need, like Goldilocks (not too much, not too little) you will maximize sales and return on inventory investment. By just satisfying demand (and not smothering it) you will ensure that you’re selling relevant merchandise at the right time. You’ll have more flexibility in buying and merchandising than ever before!


The balance between receipts, sales, margin, and inventory is a tricky one. If you want to learn the basics of inventory planning or outsource us (since this is our expertise, after all!) Please reach out for a free consultation to see if were a good fit for each other: carrie@outsidelooks.com


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