PERSPECTIVES

Turning "Big Picture" Thinking into a Strategic Inventory Buying 

About a year ago, as the pandemics were beginning to hit their stride, we introduced a framework for retailers to "rethink your merchandise mix." 

As depicted in the chart above, we cautioned that once the lockdown was over, as customers resumed shopping, retailers should be prepared for (1) reduced sales totals overall; (2) significantly re-balanced merchandise mixes, initially dominated by "basics/never-outs."

Further, we anticipated that the merchandise mix would continue to change as we re-emerge from the effects of the pandemics. And we urged retailers to take this overall construct and adapt it to their own situation; to develop their own customized strategic response.* 

Now, one year later, here's how this can become "news you can use" to quickly produce your Big Picture buying plan. Especially in the spring of 2021, some practical answers to "What to buy?" , "How much?" and "When?" are likely to be very welcome. 

Isn't it great? Headlines and the media world seem to be in unison; the dastardly COVID pandemic is being arrested. And, if we can believe the pundits, pent-up shoppers are about to buy all sorts of products and services with abandon.

But, will they?

Given this exuberance, many retailers could be building up excess inventory. Retailers once again need to be true merchants. That is, the #1 responsibility of retail senior managements must always be to control inventory. (It's the only thing that makes money, but it soaks up cash.)

Many Americans who can afford to save money – thanks to reduced spending on eating out, vacations, and consumer goods – are playing it safe and hoarding their cash, according to recent research by Gallup/Franklin Templeton.* 

And those who currently are saving at least a little money largely plan to keep saving rather than spending in the near term.

That's a sign of the times, isn't it?

While retailers are more accustomed than most folks to cope with change, 2020's unrelenting flexibility tests have been a challenge. Forget about five years. Retailers have to be ready for the next five months! It's back-to-school and then Holiday.

The only certainty about the next five months is that they will probably feel like the past five months. Yet you still must run a retail business. And that means you still must buy and sell merchandise. 

The opportunities – and the pressures – are mounting.

As more stores are able to reopen, and more shoppers are willing to emerge, what will they encounter?

• "A glut of pent-up inventory is waiting to be dumped on consumers this summer as retail stores reopen in the U.S., and shoppers for everything from shoes to sofas should be able to find major bargains," reported the Wall Street Journal* on June 2.

Like every natural disaster, whether a massive storm, earthquake, wildfire, we all are victims of COVID-19. 

Not all of us have suffered being infected by the virus. But, essentially everybody has suffered losses. 

• The loss of milestone celebrations of weddings, graduations, reunions, birthdays; anniversaries;
• Lost access to theaters, museums, libraries, sporting events;
• Loss of the sense of community that comes from going to work, or worship services, book clubs, or the local coffee shop; 
• Loss of income, job losses;
•  Or, sadly, the loss of loved ones. 

Few have been spared. 

The Retail Owners Institute® has developed a retail strategy for "Inventory Management Going Forward." 

As we often do, it was recapped as an unassuming chart (see above) identifying the Five Stages of Merchandise Mix Management, from "Before COVID-19" to the "New Normal?"