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Forecast buying doesn’t work any longer.
It may not have ever really worked well to manage jewelry store inventory but, before computers, increased competition, and shrinking gross profit margins, it seemed right.
The better name for yesteryear’s inventory management style might have been “Splurge and Purge” and it may have been satisfactory for the times.
Buying was fun and if you accumulated too much old stuff you could always have your annual Anniversary Sale or run a schlocky 60/60 Sale to get rid of the old dogs and meet a whole new segment of the population in the process. You know, the ones who never shopped with you before, and you’ll thank goodness to ever see again. But in the end, you cashed up and went on another buying spree.
Well, it doesn’t work like that today.
Today’s inventory selection must be curated for the store’s core customers, the ones you wish to do business with. It should be leaner than in years past and produce a positive cash flow used to buy new product as trends and styles constantly change and put a little into your bank account.
Buying decisions need to be made more frequently in this new environment. Reports that merely reflect on what happened in the past are of little value in today’s retail world. They are like looking into rear view mirrors. You see where you’ve been and not where you’re going.
There's a better way.
It's called Just-In-Time inventory management. It's the way the biggest most successful retailers manage their investment in inventory.
In this management scheme, decisions are made more frequently. Reviewing every week would be reasonable to make sure your good sellers are always in stock and stock levels are optimized so as not to miss sales opportunities or create museum pieces.
You don’t need a hundred styles when 20 of the right pieces produce the same result. Excess stock does only one thing – it blocks the business flow of cash.
The stores depicted in these graphs both have 400k invested in inventory. The blue bars represent product sold while the gold and green represent the cost and retail of in stock inventory. The store on the left shows the results of forecast buying - money tied up in aging product that doesn't sell. The store on the right makes a much better return by keeping new, fresh product constantly in stock.
The data you make decisions on must be precise.
Anything less is guessing. The Edge has the tools you need to curate an optimum inventory for your store. The tools to keep good sellers in stock, to find the right level of inventory at each price point in every category, to minimize the accumulation of aged inventory and to aid in the redeployment of funds recovered from the sale of aged inventory.
Business will likely get more difficult going forward, the time to start getting better is now. The right tools for the job and the ability to use those tools is a good starting place for building a business with a sustainable future.
Learn how The Edge can help: