Spring 2019 - Inside Outdoor Magazine

Inside Outdoor | SPRING 2019 18 A recent survey of 200 “senior decision makers” in U.S. retail companies conducted by Coresight Research and Celect found that 43 percent of respondents chose “over-buying” as a company challenge, and 36 percent chose “under-buying.” The survey went on to say that those respondents us- ing “manual inventory management processes were more likely to say they were struggling” with issues related to over- or under-buying. Now that this survey has actually quantified over- and under-buying as a problem, what is the next step? Given the vast number of solutions available at the push of a button for almost any problem facing us today, it’s somewhat inconceivable that so many retailers choose to struggle with an issue that is relatively simple to identify and afford- able to remedy. Having invested the last 40 years working for forecasting companies that offer automated inven- tory planning and open-to-buy models, along with ongoing consulting by in- dustry experts, there is no reason as to why a merchant would not consider outsourcing this function. What else needs to change for retailers to use the correct data to make more informed buying decisions? Among the common reasons (a.k.a. excuses) that I often hear for not utilizing an outside company for merchandise planning are ego, lack of accurate data and cost. A strong, healthy ego, or belief in oneself, is certainly one major corner- stone of every successful entrepre- neur and clearly every independent retailer. However, once self-confi- dence becomes over-inflated, it can be detrimental to the organization. It is important that management recog- nize this and looks for an alternative independent, outside perspective. If a company lacks accurate data to develop and maintain a plan, either due to deficiencies in the point-of- sale system or lack of understanding of how to use the system (often the case), inventory mishaps are likely to occur. The easy remedy for this is to invest in a system that will actually provide the data you need after con- sulting with informed sources, then take the time to learn how to use it. The initial “cost” pales in comparison to the money being left on the table due to poor buying decisions resulting from inadequate data or no data at all. Here’s a question to ponder: If you were struggling with cash flow issues due to past buying mistakes, shrinking margins as a result of too many mark- downs or out of balance inventories that hinder the store’s upside volume potential, would you be willing to in- vest a reasonable amount of money to alleviate those issues? Let me share a typical example that I often encounter. I was approached by a store with a sales volume of just more than $1 million. The margins were fine, and the operating expenses were in line with industry norms. The issue was cash flow. When the merchandis- ing data was analyzed, the problem was obvious. There was so much old merchandise that the store was los- ing customers. Most of the operating cash was tied up in the inventory. This problem was caused by buying more merchandise than the store could sell Buyer’s Side By Ritchie Sayner Retail’s Over-Under Wager There’s no good reason to gamble on inventory decisions