Go Back to
www.IndependentRetailer.com MANAGEMENT Open to Buy Planning
THE FORMULA for open-to- buy (OTB, a fi nancial budget for retail merchandising) planning is not diffi cult. To start, look at planned sales. Where do they come from? Most independents get into trouble right out of the gate, by getting this segment of the planning process wrong. A common, albeit incorrect ap- proach, is to plan monthly sales volume based on last year. Using last year’s fi gures to project future sales is wrong on several levels. If sales last year were driven by markdowns and were thus un- profi table, there is a good chance that planning around that num-
ber for the upcoming year may render the same, if not worse results. If sales were off due to a downward fashion trend or poorly timed shipments, the classifi ca- tion (method used to organize and analyze sales and inventory data) would also falter and the store may in fact end up under planning the classifi cation. Sales planning, projecting,
forecasting or whatever label you wish to assign to it, needs to be done at the classifi cation level and not by brand. Most in- dependents almost always want to plan for an increase in busi- ness, whether warranted or not.
An unrealistic sales forecast will generally lead to an overbought situation, which in turn will lead to increased markdowns at best, and decreased turn and cash fl ow at worst. Classifi cations get planned up based on profi table sales and trends, and down when the reverse happens. Merchan- dise planning that originates at the class level and rolls up to the department and then store level is referred to as bottom-up plan- ning, as opposed to top down planning, which emanates from a total company plan and works its way down to the class level.
continued on page 106
Come Visit Us At the Las Vegas ASD Show
www.koleimports.com
(800)-874-7766 or (310) 834-0004 24600 Main Street, Carson, CA 90745
Thousands of items in stock. We buy and sell closeouts. New items arriving every day.
INDEPENDENTRETAILER.COM for Industry News & Updates
February 2012
105
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112 |
Page 113 |
Page 114 |
Page 115 |
Page 116 |
Page 117 |
Page 118 |
Page 119 |
Page 120