Strategic Retail Success: Balancing Merchandise Plans for Financial Triumph in the Last Mile
By regularly reviewing your product performance and inventory turns, you can make informed decisions about budget planning and ensure that your business is on track to meet its financial goals.
1. Determine your planned inventory turns for the year. This will be based on your sales projections and desired inventory levels.
2. Track your actual inventory turns throughout the year. Compare this to your planned inventory turns to identify any discrepancies.
3. Analyze your product performance to determine which products are contributing the most to your revenue and profit margins. This will help you prioritize your inventory levels and sales projections.
4. Consider market trends and consumer demand when adjusting your budget and inventory plans. Stay flexible and make changes as necessary.
5. Ask for feedback from your sales team and other departments involved in inventory management. Collaboration and communication are key to successful budget planning.
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𝗛𝗼𝘄 𝘁𝗼 𝗔𝘃𝗼𝗶𝗱 𝗣𝗼𝗼𝗿 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗣𝗲𝗿𝗳𝗼𝗿𝗺𝗮𝗻𝗰𝗲 𝗶𝗻 𝗥𝗲𝘁𝗮𝗶𝗹: 𝗔𝗹𝗶𝗴𝗻𝗶𝗻𝗴 𝗠𝗲𝗿𝗰𝗵𝗮𝗻𝗱𝗶𝘀𝗲 𝗣𝗹𝗮𝗻𝘀 𝗮𝗻𝗱 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗚𝗼𝗮𝗹𝘀
As a retailer, it can be challenging to ensure that your merchandise plans align with your financial goals. When these two areas aren’t in sync, it can lead to poor financial performance. Here are some tips to help you align your merchandise plans with your financial goals:
1️⃣ 𝗜𝗱𝗲𝗻𝘁𝗶𝗳𝘆 𝗬𝗼𝘂𝗿 𝗞𝗲𝘆 𝗣𝗲𝗿𝗳𝗼𝗿𝗺𝗮𝗻𝗰𝗲 𝗜𝗻𝗱𝗶𝗰𝗮𝘁𝗼𝗿𝘀:
The first step in aligning your merchandise plans with your financial goals is to identify your key performance indicators (KPIs). These are the metrics that you will use to track your progress towards your financial goals.
2️⃣ 𝗦𝗲𝘁 𝗥𝗲𝗮𝗹𝗶𝘀𝘁𝗶𝗰 𝗚𝗼𝗮𝗹𝘀:
Once you have identified your KPIs, you need to set realistic goals for each of them. These goals should be based on your historical performance, industry benchmarks, and your overall financial goals.
3️⃣ 𝗥𝗲𝘃𝗶𝗲𝘄 𝗬𝗼𝘂𝗿 𝗠𝗲𝗿𝗰𝗵𝗮𝗻𝗱𝗶𝘀𝗲 𝗣𝗹𝗮𝗻𝘀:
With your KPIs and goals in mind, it’s time to review your merchandise plans.
𝘔𝘢𝘬𝘦 𝘴𝘶𝘳𝘦 𝘵𝘩𝘢𝘵 𝘦𝘢𝘤𝘩 𝘰𝘧 𝘺𝘰𝘶𝘳 𝘱𝘳𝘰𝘥𝘶𝘤𝘵 𝘭𝘪𝘯𝘦𝘴 𝘪𝘴 𝘢𝘭𝘪𝘨𝘯𝘦𝘥 𝘸𝘪𝘵𝘩 𝘺𝘰𝘶𝘳 𝘧𝘪𝘯𝘢𝘯𝘤𝘪𝘢𝘭 𝘨𝘰𝘢𝘭𝘴 𝘢𝘯𝘥 𝘵𝘩𝘢𝘵 𝘺𝘰𝘶 𝘩𝘢𝘷𝘦 𝘵𝘩𝘦 𝘳𝘪𝘨𝘩𝘵 𝘮𝘪𝘹 𝘰𝘧 𝘱𝘳𝘰𝘥𝘶𝘤𝘵𝘴 𝘵𝘰 𝘢𝘤𝘩𝘪𝘦𝘷𝘦 𝘺𝘰𝘶𝘳 𝘒𝘗𝘐𝘴.
4️⃣ 𝗠𝗼𝗻𝗶𝘁𝗼𝗿 𝗬𝗼𝘂𝗿 𝗣𝗿𝗼𝗴𝗿𝗲𝘀𝘀:
Once you have your merchandise plans in place, it’s important to monitor your progress towards your goals.
Keep an eye on your KPIs and adjust your plans as needed to stay on track.
A jewellery retailer wants to increase their sales by 20% in the next quarter.
To achieve this goal, they identify their KPIs as the number of units sold and the average sale price.
They set a realistic goal of increasing the number of units sold by 15% and increasing the average sale price by 5%.
They review their merchandise plans and adjust their product mix to focus on higher-priced items.
They monitor their progress and adjust their plans as needed to achieve their goals.
An apparel retailer wants to improve their gross margin by 5% in the next quarter. They identify their KPIs as gross margin and inventory turnover. They set a realistic goal of increasing their gross margin by 3% and increasing their inventory turnover by 10%. They review their merchandise plans and adjust their product mix to focus on higher-margin items and reduce inventory of slow-moving products. They monitor their progress and adjust their plans as needed to achieve their goals.
Remember, aligning your merchandise plans with your financial goals is key to avoiding poor financial performance in retail.
By identifying your KPIs, setting realistic goals, reviewing your merchandise plans, and monitoring your progress, you can achieve success in the retail industry.