We were speaking with a new client, demonstrating how to build a merchandise plan by vendor, category and price-point, something this jeweler had never done before. After just a few minutes into this exercise, the inventory manager said, “I love this! The plan is my jam!”
Very few people plan inventory in layers. We suggest planning by category, price-point and style, or, for your branded lines, start with vendor, then category, price-point, and style.
Otherwise, all we have is a dollar amount to spend for each brand, and that’s not close to being enough detail. I recall a visit to a jeweler who had a certain gold fashion brand in their showcase. It took me all of two minutes of looking at the selection to see what their problem was – they had sold out of all of the entry and mid-range price points. I asked the merchandisers how the brand was doing and they told me it had slowed down. Yep, you know where I headed next… categories and price points!
It wasn’t a surprise that the sales for the brand had slowed down since they were out of their top-selling price-points. The entire (vendor > category > price-point > style analysis) took all of 5 minutes. The holes were obvious – they had nothing in stock retailing for under $1,500, which was the top of their mid-range price points. A review of their styles showed how many styles sold out in 30, 60 or 90 days but were never replaced. Why? Because they had plenty of dollars invested in the brand!
A dollar budget for a brand is not nearly enough information to understand the full story. A dollar budget is only the beginning of the story. Every brand (or non-branded jewelry line) must be considered in layers, by categories, price-points and styles. Early April is a wonderful time to start planning your budgeting and buying plans for the upcoming shows. In order to make sense of the thousands of items you have sold as well as those you still have in stock, you will need to focus on a small slice of your overall business – for example, one brand at a time. The process looks like this:
Brand > Category > Price-Point > Style
Most jewelers carry many non-branded merchandise as well. The budgeting of generic merchandise is the same, but instead of doing your planning by Brand, you would select a single Category. Your generic merchandise planning process, therefore, looks like this:
Category > Price-Point > Style
Give it try – run reports on a simple generic category (non-branded & non-bridal) that doesn’t have a lot of sku’s. Something like Diamond Bracelets, for example. Organize your sales over the past year in descending order of price. How many did you sell in each price-point? How many do you have in each price-point? How fast did they sell? Of the ones you still have in stock, how old are they? These should be very simple questions to get answers to in just a few minutes regardless of your POS system. Knowing how your customers buy this category, by price-points and styles, will identify where you have opportunities to grow your business. By micro-managing your inventory in this way, you will have all of the information you need to create a solid buying plan for the upcoming shows. As always, don’t hesitate to let us know if you need help.
By Abe Sherman, CEO, BIG Buyers Intelligence Group