Mastering Merchandise Timing

14 MAR-APR 12

As the saying goes “Timing Is Everything.” This may be especially true for shoe retailers. Although selecting the right vendors and styles at the right price points is very important establishing ideal start ship and completion dates for the orders you write can be just as important.

Before buying for any new season you need to know which vendors have been the most profitable along with what styles and sizes sold best during the season. No doubt you know which lines were not profitable and which items didn’t sell. At first blush the mistakes may seem apparent but was the lackluster performance for these items really a result of the merchandise lacking appeal or was it something else? In many cases there’s a good chance that “something else” was the improper timing of deliveries.

Building orders and planning delivery

Understanding Seasonal Merchandise Planning

Dates based around peaks and valleys unique to each business are an essential component of a sound merchandise plan. Let’s consider women’s sandals as an example.

Selling Season for Women’s Sandals

A typical selling season is February through June. March April and May represent the heart of the cycle with sales usually peaking in April depending on weather and location. February and June are referred to as “shoulder” months.

• In February stores normally start building sandal inventory levels for the spring season.
• This year due to an unseasonably mild winter some stores have moved sandal deliveries up earlier to attract the fashion customer who buys early in the season when new offerings are first presented.

Just because the calendar says it’s January doesn’t mean people aren’t thinking about spring. Fresh new merchandise that has recently arrived provides a welcome relief to the frequent shopper who has been inundated with aggressive promotional markdowns on last season’s boots for the past several weeks.

June is typically a clearance month for sandals even though “in-season” markdowns probably will be taken much earlier on poorly performing styles. Final markdowns are typically taken in late summer although this past year several stores experienced good sandals sales much longer due to warm fall temperatures in a large part of the country.

Analyzing Vendor Performance

Study the data. Start by running a vendor profitability report. You will want this report to rank the vendors in each classification according to sales volume maintained margin and turnover or sell-through. If your POS system does not have a report similar to this request it. It is perhaps the most…

Important Report You Can Run

This exercise will be very eye-opening and may provide the ammunition needed for future vendor negotiations. You should also be able to run a similar report for sizes colors and if you’re up to it price points.

Allocating Open-to-Buy Dollars

Divide your open-to-buy dollars by allocating them to the top vendors you think you will be using in each classification being sure to leave uncommitted open-to-buy for reorders fill-ins new vendors and promotional merchandise. Once this exercise is complete you are ready to tackle the timing issue.

Merchandising Realities

Higher-priced merchandise normally sells earlier in the season and lower-priced items generally sell later. Recognizing this fact in addition to understanding the selling cycle of the classification you are buying will help you determine how the inventory flow needs to be structured.

Remember that your customers like to see new merchandise just as much as your salespeople enjoy selling it which means you need a fresh flow of merchandise arriving throughout the season. Many retailers have a habit of front-loading or landing most of the merchandise early in the season. The store may look great early on but it can look equally as bad as the season matures with broken sizes on key styles dominating the assortment mix.

Stores that front-load often commit so much of the OTB to early shipments that cash is not readily available for size fill-ins and off-price opportunities that may exist at season end. This practice slows inventory turnover interrupts cash flow and potentially restricts volume growth.

Many vendors offer price advantages or extra dating if you permit them to land…

Merchandise Timing

Landing merchandise early often backfires because the merchandise is picked over before the season begins. Moreover the sales associates are tired of the merchandise before the season arrives. Another point to be made against getting the majority of the inventory at the beginning of the season is that if business does not pan out as planned you already have an entire season’s worth of stock. Had you written backup orders on key styles you would have had much more flexibility in modifying or even canceling as a last resort.

Just as landing merchandise too early can be dangerous so is landing it too late. Landing merchandise too late could be inviting markdowns because there is too little time remaining in the season to sell the goods at full price. This is the major reason why an in-store completion or cancellation date should be used on every order.

Key to Scheduling Ideal Delivery Dates

The final key to scheduling ideal delivery dates lives in the open-to-buy. Your open-to-buy should reflect planned receipts by month over the course of the season. Once you receive your monthly open-to-buy you can then create a percentage of planned receipts per month instead of a lump sum amount. Your monthly open-to-buy will reflect current trends and consumer buying patterns as they unfold over the course of the season. An additional benefit is that your accounts payable will be easier to deal with and your cash flow will better mirror your expenditures. Think in terms of several small invoices as opposed to fewer large ones.

By following these simple steps you will have a clear picture of how receipts should flow. The closer you adhere to planned delivery dates the better your business will perform. Remember: Timing Is Everything!

Ritchie Sayner is vice president of business development at RMSA a national retail consulting company specializing in sales and inventory forecasting. To discuss your store’s inventory timing contact Ritchie at Rsayner@rmsa.com. Remember that your customers like to see new merchandise.
just as much as your salespeople enjoy selling it which means you need a fresh flow of merchandise arriving throughout the season.

Ritchie Sayner

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