Managing Markdowns Before Your Season Starts
As new seasons approach, the excitement of new product fill your store as both you and your customers anxiously await all the new goods that are about to arrive. Many retailers think optimistically that their vendors will ship on time, the weather will be just right and sales will be a success. The reality is, however, that this is rarely the case – particularly in today’s challenging economy. To help plan for the likely scenario that you will need to mark some goods down, you can start with the decisions being made when you are placing orders.
Planning a flat season is a good way of managing your inventory and most importantly, your dollars. Unless you have had significant growth over the last six to twelve months and firmly believe your growth will continue, planning for a flat season is the safest bet for your business. It’s likely that vendors will have excess inventory of their own that you can get in last minute should you see the need to, but let them carry excess inventory versus you in an effort to control your margins. The goal is to keep your inventory lean and avoid long periods of time between product arrival and product sell thru when possible. For example, fall fever may start in August with back to school in full gear and the traditional summer months coming to an end, but if you know your customers will still be wearing shorts in October, hold off on having too much Fall arrive too soon. Customers are buying later than they use to as a result of the economy, so pushing your delivery times back, as well, helps to keep your floors fresh and current according to the buying trends of your customers. As independent retailers versus big box players, you have more control over the ins and outs of your product arrival and selll thru and should lean on this information as you make your purchasing decisions and delivery date decisions, as well. Finally, keep some extra dollars available for product purchases made in the midst of the season. As much as we want to believe we will know what is the best seller before it even hits our floors, you may find a surprise or two that you want to bring into your assortment. Save cash as part of your sales plan so that you can chase these orders and move them quickly on your sales floor.
Planning for markdowns is inevitable for most retailers, but your goal should be to plan for as few markdowns as possible. If you take the controlled steps outlined above into consideration during your next buy season, it’s likely you will see a big difference in your markdowns once products arrive. Maintain a strong, realistic mind set when making your decisions and remember – let the vendors have excess inventory in their stock, not you!