Breaking the Overbuying Habit: A 12-Step Program for Retailers

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Are you a chronic overbuyer? During the past 30-plus years of working with independent retailers I have become convinced that the continual practice of buying more than one can profitably sell is an addiction. If you engage in financially destructive merchandising behavior season after season year after year with the best of intentions only to end up enduring the same disappointing results this article may be a lifesaver.

If this scenario applies to you you are not alone. Misery loves company and you certainly have lots of it. The good news is that with a little help the success rate of recovery is quite good.

I have developed a recovery program for retailers that find themselves members of this group from time to time. The test here identifies some of the warning signs of chronic overbuying. See how you score.

An occasional “yes” answer to a few of the questions is probably no cause for concern. However if you answered in the affirmative to half or more this could be a sign of trouble.

Continued overbuying can be a destructive behavior. I have seen it harm relationships reduce credit ratings and destroy businesses.

Like most addictions overbuying is treatable. The key point is that you get help. Not unlike other recovery programs you must take the first step. A 12-step program outlined below is adapted from other highly recognizable and successful programs. It has been modified to be applicable to the retail industry.

The 12 Steps

1. Admit you have a buying problem and that it has become unmanageable.
2. Accept that there is an answer outside of your store that can guide you in the right direction.

Buyers Beware

A 12-Step Program for Overbuying

by Ritchie Sayner

Do you often feel forced to markdown merchandise to generate cash to pay invoices?

q Y q N

Do you struggle with cash flow issues regularly?

q Y q N

Do you experience slow shipments because you owe vendors money?

q Y q N

Do your customers “wait you out” because they know your store has huge sales?

q Y q N

Have you ever heard customers say that your store always has “the best sales?”

q Y q N

Is it important to you that your reps like you no matter what?

q Y q N

Does your floor or backroom ever feel overcrowded with merchandise?

q Y q N

Do you ever run out of places to display merchandise?

q Y q N

Do you find yourself cancelling orders every season?

q Y q N

Do you ever buy close-outs because you can’t pass up a “good deal” even though you already have too much inventory?

q Y q N

Do you ever feel pressure to buy because a rep has taken the time to show you a line?

q Y q N

Do you buy what you like and hope it is the right amount?

q Y q N

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Step 3:

Once you have found what you believe is the guidance your operation needs make a decision and move forward.

Step 4:

Implement a sales and inventory plan by store and classification and stick to it.

Step 5:

Learn to say “NO!” if the line doesn’t appeal to you. Remember it’s your money.

Step 6:

Review your merchandise-on-order report monthly at the very least.

Step 7:

Don’t allow substitutions without your prior approval and don’t accept goods past completion date without a discount.

Step 8:

Change the misguided belief that in all cases you need more to sell more.

Step 9:

Retrend your sales forecast regularly. Look for breakout classifications as well as areas beginning to slow.

Step 10:

Avoid the naysayers. These are the people that want to keep you locked in the old behavior.

Step 11:

Reduce the amount of…

Preseason Orders

This is where the problems start. You know you are going to need money to fill in hot sellers as well as some promotional buys.

Step 12: Don’t Be Too Hard on Yourself

Relapses can happen and you are likely to fall off the wagon more than once. Stay the course. This is a career-long solution.

Of all the steps outlined above step 10 might just be the most challenging. If you are the company president or owner you are constantly surrounded by enablers. These are the people that like you the way you were before. In many cases (not all obviously but several) vendor reps are the biggest enablers. They don’t want you to change. The more you overbuy the more money they make. This is a great example of codependent behavior.

Your own customers can be enablers too. You will hear it in their comments “We used to just love your sales” or my favorite “Are you going out of business you don’t have as much merchandise as you did before?” This comment can be frightening for some retailers until they get comfortable with the process.

The Store’s Buyers as Enablers

Buying by classification takes getting used to. It’s a new skill and buyers are creatures of habit. They are not fond of change. They will tell you they like things better the “old way.” Problem is the “old way” was when buyers had free reign and could buy what they wanted when they wanted without accountability. And make no mistake; this program is all about accountability.

Ritchie Sayner

Ritchie Sayner is a trained counselor for addictive overbuying. He is available for group therapy and interventions. The number for his 24-hour support group is 816-505-7912. If you are ready to take that first step email him at rsayner@rmsa.com

Inside Outdoor 2013

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Summary

The article addresses the issue of chronic overbuying among independent retailers describing it as a potentially addictive behavior that can harm businesses and personal relationships. It introduces a 12-step recovery program tailored for retailers to help manage and prevent overbuying emphasizing the importance of accountability and seeking help. The program encourages retailers to recognize their buying habits and implement structured inventory and sales plans to avoid financial pitfalls.

“If you engage in financially destructive merchandising behavior season after season year after year with the best of intentions only to end up enduring the same disappointing results this article may be a lifesaver.”

Real-World Examples of Overbuying in Retail

Overbuying is a common issue faced by many retailers leading to various financial and operational challenges. Here are some real-world examples illustrating the consequences and recovery strategies related to overbuying:

• A local boutique owner consistently overpurchased seasonal clothing resulting in overcrowded storage and frequent markdowns to clear inventory. By adopting a structured inventory management plan and regularly reviewing sales forecasts the owner was able to reduce excess stock and improve cash flow.
• A small electronics retailer faced cash flow issues due to overbuying which led to delayed payments to vendors and strained relationships. By implementing a disciplined purchasing strategy and learning to say “no” to unnecessary deals the retailer improved vendor trust and financial stability.
• An independent bookstore frequently bought large quantities of bestsellers hoping to capitalize on popular trends. However unsold inventory piled up leading to significant markdowns. By retrending sales data and focusing on core customer interests the bookstore was able to tailor its inventory more effectively and increase profitability.

Discover Proven Retail Strategies!

Explore expert insights and actionable advice in
Ritchie Sayner’s renowned book:
Retail Revelations – Strategies for Improving Sales Margins and Turnover 2nd Edition.

This must-read guide is perfect for retail professionals looking to
optimize their operations and boost profitability.

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