If you were to magically sell every SKU in your store tomorrow, what would you replace them with? While you’re never likely going to have a totally clean slate, you can take the first step of creating a merchandising strategy, and, later a merchandise plan.
A carefully crafted strategy will deliver revenue growth and profits and secure your competitive advantage. It is the difference between having a vague idea where something is versus using GPS to get there.
PART 1: YOUR MERCHANDISING STRATEGY
A merchandising strategy defines a company’s future plan in terms of what you want your assortments to be, regardless of what you currently have in stock. A merchandise plan then articulates your desired outcome by product groups — revenue, gross profit percentage and dollars and inventory turn. Tactical actions are necessary for the day-to-day running of a store or to stay afloat, but strategic actions are the ones that ensure a thriving future.
Now that you are in a strategic frame of mind, start asking yourself questions about the vision for your store, and the merchandise required to get you there:
- Do I want to expand my bridal clientele?
- Do I want to attract the female self-purchaser?
- Do I want to resonate with the Gen X and Y consumer?
- Do I want to carry sterling silver, vermeil or even accessories?
- Do I want to reduce my margin percent, but increase my margin dollars?
- Do I want to adjust the percentage of designer inventory versus in-house branded?
Once you have articulated your strategic goals, make sure they are SMART: Specific, Measurable, Achievable, Realistic and Time-dated.
A non-SMART goal might be: “Expand my bridal business,” while a SMART goal could be: “Expand my bridal business by 30 percent over last fiscal year by creating three in-store branded collections by March, targeted to entry level price points of $1,000.”
With strategic goals established, step back again and compare them to your overall metric goals — revenue growth, margin percent and dollars, inventory turn — and ask yourself, “Will these goals get me there?” If you are comfortable that they will, then you will be ready to flow them into your merchandise plan.