Enjoy this free access to selections from The ROI's proprietary content. Ready for more? The Members-Only Collection includes even more for owners about inventory management and Open-to-Buy planning.
Retailers. You know your average inventory over the year, right?
Is that enough for the sales you expect?
Or too much?
Now, get perspective on that. In 10 seconds (or less!)
Do your stores have higher sales volumes than the median retailer with the same levels of inventory?
• That suggests that your inventory turns would be in the Top Quartile of retailers in your segment.
• It also is likely that you are very cash flow positive!
Wow! Nice to get some perspective, isn't it?
To get even more perspective on your store's performance compared to others in your retail segment, see the Benchmarks here at The ROI.
But...what if, with the same amount of inventory, your sales are lower than the median performing retailer in your segment?
• That likely means your inventory turns are lower than the median retailers.
• It also suggests that a cash crunch may be looming.
Oops. Good to have a hint about that in advance, isn't it?
So Now What?!
Is it better to grow sales? Or focus on controlling inventory?
Here's how to compare your choices.
1. First, do the math, starting with sales.
Identify the dollar difference between your sales and the "median retailer's" sales.
2. Next, consider the inventory levels.
Go back to the SALES Potential calculator and enter different amounts for the Average Inventory @Cost until the sales volume it shows (for the median performing retailer) is close to your sales volume.
Now, do a little more math. What is the dollar difference between this revised inventory level and your original entry for inventory?
3. Now, apply your best judgment!
Compare how much annual sales would have to grow, with the amount that average inventory would need to be trimmed over a 12 month period.
Then ask yourself:
Which is more plausible for our stores? More likely to be achieved? More controllable?
Every retailer will have different answers to those questions.
Do not bog down at this stage. Make a choice, and make it happen. The goal: take advantage of the lead time!
Since 1999, empowering retailers and store owners to "Turn on your financial headlights!"
Online Calculators for Inventory Buying Plans - By month. By department. By YOU!
MULTI-DEPARTMENT Open-to-Buy Calculator with GMROI • SPEEDY Buying Plan Forecaster
Explanatory How-To Articles - Used and loved by retailers worldwide!
Getting Through the Retail Maze with GMROI • The Diamond of Doom: The Costs of Excess Inventory • Merchandise Planning: Back to the Basics • Manage Turnover to Keep Inventory In Shape • How to Cut Inventory – FAST! • Basics of Turnover and Open-to-Buy Plans • Frequently Asked Questions
Webinars from The Co-Founders - Lively and empowering!
Multi-Department Open-to-Buy Planning • The Power of GMROI • Basics of Turnover & Open-to-Buy Planning • Managing Markdowns
Online, Self-Paced eLearning Courses - Learn it once. Use it forever!
GMROI – The #1 Measure of Inventory Productivity • Projecting Inventory Buys
Short How-To Video - See it in action!
How to Use SPEEDY Open-to-Buy Calculator
Online "Gadgets" – Get Quick Insights
Index of Sales Potential • GMROI Calculator