YOU CAN’T “SEE” A WHOLE STORE FULL OF MERCHANDISE!

By: James Hallman

A customer walks into a fine menswear store and says “I’d like some fine menswear, please. I would like to buy a proportionate amount of suits, sportcoats, dress shirts, dress pants, ties, belts, sport shirts, knit shirts, casual pants, jeans, belts, shoes, socks, underwear, cufflinks, lapel pins, and each scent and size of available colognes. And I want every piece of clothing in each size, color, label, and fabric that you carry.”

The same guy, or his clone, walks into a bike shop and requests some road bikes, mountain bikes, comfort and other hybrid bikes, cruiser bikes, helmets, kid’s bikes – from trikes through freestyle and BMX; plus some helmets, car racks, clothing, energy food, an assortment of all parts and accessories available in the store.

You gotta love a customer like that!
 
Our mission as merchants would be a lot simpler if all customers bought that way. But real life retailing is seldom simple, and customers are hardly ever cooperative in helping us sell off our inventory through their well-balanced purchases. The lawyer looking for a suit won’t necessarily place a matching investment in jeans; the non-biking parent shopping for a Christmas bike for junior isn’t going to buy some of all that other stuff just to make life simpler for the bike store retailer.

Alas, we as merchants must see deeply into our merchandise offerings and watch what customers are buying and how they are buying it. When customers come in, they aren’t coming to buy our “stuff”. They are coming to buy “particular” stuff, certain stuff which they believe will fulfill their expectations for the moment. No amount of suggestive selling, no visual merchandising of the most powerful sort, will get them to buy proportionately across our entire offering.

Ask any retailer in the world whether their business is “up” or “down”, and they can tell you. Ask them which “part” of the business is up or down, and by how much, and a few will know that, too. But only a few.

It is a sad fact that most retailers monitor the performance of the whole business, and try to manage the whole store from the top down. They buy for the business that way, too.

But just as customers don’t come in to buy “menswear” or “lumber”, but rather a “sportcoat” and “maybe a pair of slacks” or a “sheet of ½” interior plywood” and “some 10 penny nails”, so must the retailer who goes to market go to buy “ sportcoats” and “slacks” and “plywood” and “nails”. And they must know how much to buy of each, based on a reasonable expectation of sales potential for each.

The “total” of anything is the sum of all of its parts. In order to effectively manage any business, it must be broken down into its most manageable parts, and each of those parts must be accurately monitored and tightly controlled.

Every store has groups, or classifications of merchandise. It is at the classification level that sales, inventory, and profitability should be monitored, projected, and managed.

Customers shop and buy items within classifications within the store- they don’t buy the ‘store”. So, to better serve the customer, to make our inventory more “consumer-responsive”, we must understand that we are really managing several smaller shops within the bigger store.

In a multi-unit operation, the same is true- each classification in each store must have its own sales and inventory plan.

Sales, initial markup, markdowns, maintained markup, transfers in and out between stores, receiving at cost and at retail, stock to sales ratios, and the quantities “on order” by expected delivery month, must be planned, by classification by store. Then, actual performance must be monitored against the plan, and appropriate action taken.

Record keeping must be set up to capture the appropriate information, both the plan and the actual performance, and summarized so that it can be seen and acted upon.

Most independent retailers know that all of this is true, but see it as a daunting task. Or, they aren't quite sure either how to do it- or how to work it all in to their already overflowing schedule of tasks.

That's where The Hallman Company comes in. We can help you decide what information to capture, how to capture it, and how to report it to us monthly so that we can handle all the forecasts, adjustments, and recommendations for you. For more information with no obligation and no hassle, just complete the contact form on our Contact Us page.

We can help you "see" more clearly.

ABOUT THE AUTHOR: James Hallman has over 40 years in retail management, both corporate and entrepreneurial. For the last 18+ years, he has operated The Hallman Company, a retail consultant agency based in Atlanta, Georgia. The Hallman Company specializes in bringing best-of-class services to best-of-class specialty retailers. Services include inventory planning with pre-calculated open to buy, and team management training.