• Kevin Natapow

 

Balancing inventory during the holidays can be challenging and needs a lot of attention so you are not under/over inventoried. First off, assuming you do item evaluation in August/September and physical inventory as well and have cleaned everything up in terms of what is un-orderable and removed from the floor and all new min/max numbers are set, then your regular all season merchandise should be ordered just as you would the rest of the year. You should also be bulking up on regular items (non-seasonal) from your top 20% of sales by profit in August/September. You should be ordering 2/3 of what you will need for Sept-Dec (typically 50% of your annual sales) and checking those OHQ #’s at the end of October to see if you are above or below forecasts but beyond your bulk up items and seasonal items, all regular merchandise should be ordered as usual. All Seasonal items should be reset so the maximum is 50% of the number being ordered in the fall and the minimum half of the maximum. If/when these come up for reorder you will have to monitor them carefully to not just follow your min/max numbers beyond a certain date. We typically reevaluated all seasonal items after Black Friday and placed one more order for seasonal items based on the formula below:

 

if you sold 10 of something in September – October how many more do you need for November –December? After Black Friday you would run the same calculation but just for the balance of December. You will have to use your sales by month percentages. For our store, monthly sales percentages were: Sept – 5.5%, Oct – 8.7%, Nov – 12%, Dec – 20%. So if you are trying to figure out how much more of an item to order at any given time you use your monthly sales percentages. For example, if we sold 10 in Sept/Oct I know I can sell 70 in a year (10 divided by 14.2%). So I know I should be able to sell 15 more in Nov/Dec (70 times 22%). More or less. It is a lot of math but the most important thing for any small retailer to do is to have exactly the right merchandise at the right time and in the right quantities.

    1. As a former department store buyer and merchandise planner, I’d agree there is lots of math involved to end with right amount of inventory. Keep in mind, however, that there will be customers coming to your store post holiday looking for “deals”. While FT is not mainstream retail, know that a good post-holiday pricing strategy can also fuel Jan/Feb sales.
    2. Good point

 

  • Kevin Natapow

 

Yes they will but you don’t really want to be selling merchandise at cost that you know will sell at full retail the following season. Sales are great for stuff you want to get rid of.

  1. We’ve been having some success with buying deeply discounted items from our wholesalers, selling them at a “discount” for the customer where customer is getting 40-50% off regular price, and we are getting a mark-up between 100-150%. Those are the types of things you can bring in for your post-holiday sale – we’ve been using them to feature in things like summer sale or Black Friday as well.