It’s that time of year when thoughts turn to the new season, buying budgets are set and trade show visits are in full swing.
So how can you ensure the decisions you make this season drive your business forward with improved sales, margin, sell-through, stock-turn and bottom-line profits? Helen Masters of Pudding Lingerie gives an in-depth analysis and guide to better buying.
I’ve done every role going in the lingerie industry (apart from design which is a Godsend to the world) & the key thing I have learned from my time as a retail buyer & merchandiser; wholesale brand rep; & a trainer & consultant to buyers in top stores is this: preparation is everything.
It’s tempting to dive into buying season with supplier appointments & trade show visits but make sure you have your game plan ready first .
I use a handy A-Z guide as a checklist through buying season for my retailer clients. It helps me plan the buying process, make sure I have all the information I need to make the best decisions before I complete any orders and it also works as a visual memory jogger that I can stick on the wall to make sure I haven’t missed anything.
A – ANALYSE
80% of Your Sales are in c20-30% of your Stock – do you know which stock is selling?
The businesses that under-perform are those that fail to spend adequate time analysing their previous sales & stock. Many of those don’t realise that around 80% of their sales are from c 20-30% of their SKUs (see example A).
They see low sell-through as the norm, write off unsold stock and simply repeat the same buying patterns – cue death by stockroom.
Analyse before you Act.
B- BUDGET
Build the open to buy before you look at collections
- Work out what you expect to sell at Retail
- Divide that by your normal achieved mark up to work out the wholesale value of those sales
- Buy an extra 25% above what you expect to sell
- Expect around 25% to be left at the end of the period you are buying for
- If you have more than that left from the previous season, adjust the budget down by the excess
That is the budget you can spend.
C – CURRENT STOCK
Don’t ignore it!
Unless the stock you have left is totally unsellable (it can happen in the first year but our job is to make sure it doesn’t !), then discipline yourself to sell through the stock you have rather than piling up stock that gets hidden away and ties up cash.
D – DIVIDE THE SPEND
Divide the OTB between :
- SEASONAL: e.g. 20% – lines you need to forward order
- CONTINUITY : e.g. 50% – ongoing bestsellers , order in smaller amounts then top up
- FUTURE REPLENISHMENT : e.g. 20% – the top ups you plan to do in season
- OPPORTUNE : e.g. 10% – to take advantage of deals e.g. discounted end of lines
This way you will avoid over-spending & give yourself the opportunity to top up on bestsellers and maximise markup buy taking advantage of good deals.
E – END USE
Segment your spend into all the key consumer END USES you wish to cater for:
Ensure you have adequate ‘everyday’ and don’t overload on ‘boudoir’ – or vice versa depending on your store! Remember one person’s ‘sexy’ is another person’s ‘comfy’ so choose universal styles that can span end use where possible
F- FRAMEWORK
Think about the features of the range you need & develop a FRAMEWORK to turn your strategic intent into a range of products that you will buy
The framework needs to lay out what you need to both deliver on your proposition and meet your target customers’ needs , in terms of:
- End use and Price point
Then within those ‘boxes’ you must consider
- Brand mix
- Style mix
- Colour mix
- Size mix
It’s a good idea to set the range plan out as a matrix & highlight the boxed you want to fill (and those you don’t!) before you start to view stock.
G – GOOD/BETTER/BEST
You know you need …
- entry level price hooks to draw people in
- to offer something that customers can splurge on if they choose it
- customers to see why they should choose the $150 bra over the $50 bra
Adopt a good/better/best approach for each customer need, matching ranges to key price bands – e.g. entry/mid/premium/luxury.
Make sure everything warrants its place!
H – HERO PRODUCTS
Know the non-negotiables…
If you want to maximise margin as well as sales, and give customers a reason to seek you out & comeback, then you need to go beyond the ‘safe, predictable’ range that everyone has.
At the same time – the bulk of what you sell will be in the ‘bread and butter ‘ lines. Knowing which HERO products will drive the 80% of your sales and factoring those in first, allows you to then venture into some lesser-known brands, often those which offer exclusivity; higher margin and flexible terms and will make you a destination for customers.
I-ITERATE
The best laid plans go astray when you are faced with a deluge of divine designs….
Once you hit trade shows and supplier appointments plans can go out of the window.
If you have set a sensible budget before you buy anything, that will help to keep you on track – but be prepared to want everything and for everything you want to cost more than your top down budget. Pencil in what you want, cost it then build the bottom up budget – and iterate until the top and bottom meet!
Example A
J – JUST IN TIME STOCK
Don’t Over-Buy
It can be tempting to stretch to meet a high minimum order on a brand you desperately want – and sometimes that works – it is good to be a big customer you our suppliers. But where you can, invest in continuity lines that you can buy in smaller quantities and then replenish regularly.
These are likely to be your safer bestsellers (they are continuity lines because they are your suppliers’ bestsellers.) Order your top sizes and colours here, then add the more peripheral colours and sizes as you gain confidence, or by special order for customers . This Just In Time allows you to expand the range you offer customers while avoiding death by stockroom .
K – KEY CRITERIA
Know How to Choose the Best from Competing Options
As a buyer you are always forced to choose between two options you want. Having a pre-agreed criteria to do that makes it easier & avoids you relying on personal preference.
Evaluate competing options based on:
- Margin including likely need to mark down
- Quality – including quality of accessories
- Size range
- Ability to buy small and top up
- Price flexibility
- Supplier terms
And choose the best.
L – LINKED PRODUCTS
Don’t just choose a range based on the anchor product…
The best buyers grow the sales opportunity by linking products that naturally go together or that meet a separate need (and tap into a separate pot of money) on behalf of the consumer.
Consider :
- The ratio of linked items to anchor items (e.g.. briefs to bras) to buy
- The size profile of linked items (e.g.. knickers) , in relation to the size profile of anchor items (e.g.. bras)
- The ratio of accessories and add-ons to buy (e.g. nightwear, suspender belts, standalone briefs, shapewear)
M – MARGIN
The margin you sell at won’t always be the margin you buy at – so plan it
Build a life span and markdown plan for each range , e.g.
- a seasonal line may be planned to sell through in 12 weeks
- offer it at full price for 8 weeks
- gradually mark it down in the last 4 weeks to clear
- plan the % of stock to be marked down & the discount – all to hit your net target
N – NOS
Never Out of Stock
If you intend to use Just In Time stock management for your supplier’s Never Out of Stock (NOS) lines you must have a slick system in place:
- Systemise all ordering
- Set up reorder triggers – e.g. when a SKU hits 1 an order is triggered
- Run weekly purchase orders
This allows you to also sell-to-order & build in special; orders for customers: hold 1, sell 5
O – OPTIONS
Break your budget down into the number of separate options you can offer your customers
- It isn’t enough to know you can spend $10,000
- You need to know how many bras, how many briefs, and how many other items you can buy
- To work that out you need to know how many bras you are likely to buy ‘per option’
- If you are going to buy 60 sizes per style you can have far fewer options than if you buy 25 sizes per style
- You may need to reduce the sizes per option to provide adequate breadth of choice
P-PRICING
Define your Pricing strategy
Is your pricing:
- Premium/mass market/value based?
- Cost based, customer value based, competitor based? Ideally a mix
- Luxury or value based pricing e.g.. ending in 0.99? 9? or 0?
Which price bands will signify good/better /best logically to your customers?
What are your specific price points – don’t have too many!
Do you need to :
- vary price by sales channel ?
- offer loyalty pricing ?
- offer price matching/
Q – QUESTION
Always question not get the right result – a good buyer has an ongoing argument with themselves !
- Will our customer buy this?
- Will they think it is worth this price?
- Will it grow sales or cannibalise?
Every option needs to add something – if it doesn’t take it out!
Example B
R- RANGE SCHEDULE
Plan new offerings each month, using the Range Schedule
- You want an ongoing pipeline of sales
- Your customers want reasons to shop with you & treat themselves
- The answer: the range schedule – which new lines will go on sale each month & which on sale lines will sell out/ move to the Last Chance rale/ go on mark down?
- This gives your customers newness and bargains at the same time
S- SIZE PROFILE
You will sell more 34Fs than 40Bs – so don’t buy the same amount of each
- If you buy every bra in every size you will succumb to death by stock room
- Look at the size profile you sell & buy in line with this (unless you feel you need more or less of certain sizes)
- Consider the coverage you need of particular styles or colours in each size (e.g.. if you need 20 34Fs how many are balcony bras, full cup bras ? how many are beige, brown, black, white? )
- Only place orders when you know exactly how many you need of each size and stick to it!
T- TOP UPS
Keep aside budget for in season top ups
- For each of your planned purchases, work out how many you will buy initially and how many you will plan as replenishment
- If you plan to buy 6 black 32fs in one bra for example over the period then you could buy 2 to begin with and then top up the others as the first two sell
- This helps manage cashflow ; avoids you buying too many if for any reason they don’t sell and makes it easier to hit minimum replenishment quantities so you can place customer orders when you need to
U- UNDERSTAND HOW TO MAKE MONEY
Over loaded buyers can get caught up in simply repeating a formula each season rather than doing what will actually make money
Understand & Track your KPIs – the difference between the most profitable and least profitable businesses is in the detail
V-VISUALISE
A simple visual representation is a great decision-making tool
A visual representation of your range – showing styles and colours at different price points and end uses can be a great way of getting to grips with a huge amount of data and filtering down to the best options.
It allows you to easily see duplication, or areas that are over or under-represented plus is a simple way to present your suggested range to key stakeholders (see example 5)
W – WSSI
Your job doesn’t stop once the orders are placed – the WSSI should be your best friend
Once stock starts to arrive, the Weekly monitoring of Sales, Stock & Intake ( the WSSI) is the hallmark of better buying (and selling).
The WSSI IS a live document showing:
- all the stock you hold
- what you plan to sell each week/month
- what you actually sell
- what you have due to come in
It assists in optimising stock levels (neither over or understocked) by identifying strong/poor performers and where remedial action may be needed; enabling efficiency, effectiveness, maximum profitability and continuous improvement.
X – EXIT
Better Buyers exit bad lines sooner rather than later
Don’t fall into the trap of thinking ‘it will sell eventually.’
Yes, it may be good stock that deserves to be sold at full price, and yes it may sell in time. But here’s the reality:
- If you have $10k excess stock at cost that takes a year to sell at full margin, you may make $15k GP in the next 12 months
· If you had a plan to clear that stock in the next 6 months at a 20% discount, and reinvest the budget in strong sellers that sell through in the next 6 months at full mark up you can make $25k GP in the next 12 months.
· An extra £10k in profit.
Know when to exit – and have an exit plan.
Y – YES & NO LIST
Know your Yes & No
The Yes & No List is key to managing your stock and exiting those lines that need to be exited.
Build it up over the season, review it regularly and make sure this season’s ‘NOs’ are not on next seasons’ ‘YES’ list (see example B)
Z- ZOOM IN & OUT
Be both a helicopter & a Microscope
The best buyers constantly zoom in on the minute detail (sales & stock by SKU ) while also zooming out to see the bigger picture (macro trends)
Both are equally vital.
It isn’t always easy, but get your zoom on and you’ll see your results rocket.
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For a limited time you can register to receive the full introductory A-Z guide to being a Better Buyer FREE OF CHARGE and to book a place on the next Better Buying webinar, by contacting consulting@puddinglingeire.com.
Better Buying webinars . Places on the webinar are £195 + VAT and the next date is Friday 13 February 1-2.30 pm
Places are available on a first come , first saved basis and a video is available for anyone who can’t attend.
The webinar will cover:
- How to Set the Criteria for What to Buy
- How to Work out How Much to Spend
- How to Work Out which brands, ranges , styles and colours to buy and in what size range
- How to Work Out the quantities to Buy
- How to Set Pricing
- How to Ensure What You Buy Sells
- Dodging the Pitfalls : Overcoming the challenges along the way
The DIY Test: Can You Be a Better Buyer?There will also be time for questions and options for follow up help .
Pudding offers a range of affordable services to help lingerie buyers and lingerie businesses excel – visit www.puddinglingerie.com and contact Helen on +44(0)7789921097
