From The Co-Founders


Tips, Tactics & Strategic Insights and Commentary
from The ROI Co-Founders, Pat Johnson and Dick Outcalt
Outcalt & Johnson: Retail Strategists LLC; Retail Turnaround Experts

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Smart Buying in the Covid Age

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.

Your vendors are more eager than ever to meet their own sales goals. And emerging online wholesale marketplaces touting "guaranteed sales" and 60 day terms and small minimum orders seem to be multiplying, thanks to deep-pocketed investors.

Not only is there the traditional pressure from the vendors to "buy more, save more,"  there now are the online sales techniques: "Retailers who bought this also bought this..." 

How best for retailers to take advantage of these new resources...and still have any cash?

It's all in having a plan, a buying budget. And having the confidence to stick to it.

Amidst all of the uncertainty of 2020, there is a way for retailers to do just that. 

It starts with making some savvy assumptions about expected sales. Then, at The ROI, your sales assumptions can be turned into an inventory buying plan – in nanoseconds. All on your own.

A game plan, a path forward. Some semblance of clarity. What could be better?

Step 1: Make Your Sales Assumptions

First, make your assumptions about the sales you anticipate for back to school and the Holiday season. Given the on-going uncertainty of the virus, few specialty retailers will meet or exceed last year's results. 

So, start by looking at last year's back-to-school and Holiday results, and dial them back for this year. 60% of 2019? 75%? Be as realistic as you can. 

Step 2: Merchandise Mix of those Sales

Next, a critical step: nail down your assumptions about the MERCHANDISE MIX you will need. (For more about this, see New Dynamics of Merchandise Mix and Post-Covid-19: Five Stages of Inventory Management.) Don't be shy about your assumptions.

  • Purchases of "Basic" merchandise will prevail. Perhaps as much as 50% to 65% of your total sales.
  • The remaining 35%-50% of sales will be predominantly "expanded basic." 
  • Expect just a small portion of your sales to be dedicated to "discretionary" items

Step 3: Convert to Buying Decisions

Now, turn all this into something you can use to make some decisions. Put these sales assumptions into The ROI's online Multi-Department Open-to-Buy Planner. It's easy and fast for retailers. 

  • For this first draft, call one department Basics, and enter the expected sales. Do the same for the next two "departments," Expanded Basics and Discretionary. 
  • Enter your best guesstimates of expected margins and turns for each category (and an estimate of how much of your inventory @cost is in each category to start.)

And that's it. Immediately, for each of these categories, you have a monthly inventory buying budget. And it happened "auto-magically!"

These OTB plans become the guardrails for you and your buyers. Within those budget parameters, you then apply your best judgment of which vendors to purchase from, and what items to select. You also will have a ready answer when a "special buy" pops up: do we have any Open-to-Buy?

This unique online "calculator" is a tool developed specially for owners. It enables you to quickly develop a game plan for your store, all on your own. Auto-magically!

And, you can update this game plan as the game unfolds. Adjust and tweak it whenever needed. All on your own. 24/7. No additional cost. 
This is its time. Take advantage and make this your time too!


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