Audio version available! Listen to Outside Looks founder, Carrie Watson discuss different types of receiving styles by clicking on the YouTube link above.
Independent retailers, what's you receiving style? Do you DRIP in merchandise a little at a time? Or do you FLOOD the shop with all the new, all at once? Read on to discover the positives and negatives of each.
I wanted to take the time today to discuss how the schedule & flow of merchandise can impact our business in both obvious and discreet ways.
Flood Method, defined.
Receiving 3-6 months of merchandise in a short period of time.
Also known as "front loaded."
Positives.
Fewer purchase orders & invoices to manage.
The store instantly feels fresh.
Negatives.
The receiving department is bombarded and makes mistakes. Let's build a box fort!
Visual merchandising is a wreck. Excuse the mess.
The store is too full & it's hard to move around. Oh--sorry, excuse me.
There isn't enough room for the sale rack & less desirable merchandise moves into storage. In the words of N*Sync, "Bye bye bye"
Constant rearranging of old products to make the store feel different. Putting lipstick on a pig.
The staff loses zeal about the once-new merchandise as it starts to age and there's nothing new to reinvigorate them. I'm bored.
Merchandise flooding breeds a complacent 'wait & see' sell-through mentality (vs a 'take action' mentality). I'll do that later...yeah right.
After seeing the new merchandise, frequent customers don't see anything new for a while. Customer yawns.
The popular items, colors, & sizes sell--but can't be replenished because 100% of the budget was spent on the initial shipments. Then sell through suffers because the merchandise mix isn't right. Then margin suffers because the aged merchandise has to be discounted. Viscous.
Merchandise flooding = increased inventory ownership (even if it is only temporary). Increased ownership = increased risk. What happens if you write orders +20% for +20% sales? What happens if there is a recession? Political uncertainty? Increased tariffs? A natural disaster? Weather doesn't cooperate? Any of these can very realistically result in soft sales. Then you're STUCK with that EXTRA inventory. Risky business.
All invoices are due at once, resulting in jolt-y cash flow. Ouch.
Drip Method, defined.
Receive a little bit every month--the receiving trend follows the sales trend.
Receive next-month's-sales, this month.
Positives.
The peaks and valleys of sales are mirrored by receiving. The receiving department is predictable, steady, and accurate. Perfection & clarity.
The visual merchandiser highlights each product at the right time without space constraints. Look how pretty!
Shoppers & staffers navigate freely without intrusive obstacles. I'm free!
There is room for the sale rack and we can cash out on every piece of inventory. $Bye$bye$bye$
The drip of new product inspires the visual merchandiser to react to sales and new merchandise to create a compelling customer shopping experience. Let's try this over here!
The staff geeks out about each new piece of merchandise and stays engaged in product storytelling. Let me show you this new thing we got...
Merchandise dripping creates the expectation that merchandise should sell in 30-60 days. If it ages to 60+ days, then we need to take action. Let's do this!
Increased customer curiosity & frequency. I wonder what's new...
The popular items, colors, & sizes sell--and in this environment we can refill the best sellers (and make more money one them). Then we find the proper size run curve because we replenish sizes. Then margin increases because we don't have to immediately put the XS and the XXL on sale. CA-CHING.
Merchandise dripping = sell through control. Control = less risk & more power. By dripping merchandise and observing our customer's reaction (sales), we create a time buffer so we can react and prepare for the future. You have the power to capitalize on successes, mitigate risk, cash out on mistakes, and cancel future mistakes. Work work work work work.
Invoice are consistently due soon after the shipment has sold. Encouraging smooth & manageable cash flow operations. $mooth $ailing.
Negatives.
There are no negatives.
I repeat.
There are no negatives.
Our most successful retailers drip product according to our merchandise receiving schedules. They know exactly how much to spend each month, in each category, for each location. We forecast sales and hold them accountable to metrics like turn, margin, & GMROI. We operate on a month-to-month agreement with seamless data integration for most point of sale systems. Request a demo.
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