Spring 2019 - Inside Outdoor Magazine

Inside Outdoor | SPRING 2019 20 Buyer’s Side profitably – the classic definition of over-buying. Over-buying is the result of either A) not having an adequate merchandise plan with which to make sound buying decisions by classifica- tion or B) not following the plan. The store had an average invento- ry of approximately $800,000 @ retail, a large percentage being from past seasons. This worked out to be an inventory turnover of 1.25 times an- nually. Based on the mix of merchan- dise, it was determined that an initial turnover goal of 2.7 was achievable, and a strategy was put into place to liquidate the old merchandise and begin buying the right amount in the correct classifications. After the first year of working with this retailer, the inventory was reduced by approximately $430,000 @ retail or $215,000 @ cost. The sales started rising as new customers began finding the store through word of mouth, and old customers returned. The margins did decrease temporarily due to clear- ance markdowns needed to move the old merchandise. However, the cash was so much better that the owner could hardly believe the transforma- tion. The line of credit was paid off, and the store’s buyers now go to mar- ket armed with a solid plan knowing exactly how much to buy, when to land it and when to mark it down. This example is typical of first year results. Most retailers will end up spending less on inventory but wind up doing more business because the dol- lars are invested where they are need- ed most. On average, a minimum three- time return on investment is typical for every dollar spent on merchandise planning services, according to Marc Inventory Challenges Faced by Responding U.S. Retailers Source: Coresight Research; Celect Overbuying Inventory Underbuying Inventory Buying the Wrong Type fo Products Misallocated Inventory Fulfilling Online Orders from Stores, Distribution Centers, etc 43.0% 36.0% 28.0% 23.5% 12.5% Share of Respondent’s Total Invent ry Sold at Full Price, Among U.S. Retailers Source: Coresight Research; Celect 90% to 100% 80% to 89% 70% to 79% 60% to 69% 50% to 59% 40% to 49% 30% to 39% 20% to 29% 10% to 19% 0% to 9% 15.0% 18.0 16 .5% 12.5% 8.0% 7.0% 3.5% 5.0% 2.5% 4.0% usb recharge EARTHEASYDISTRIBUTION.COM 80hr runtime 60 grams 40m range waterproof IP67