Hellow and good morning. I am Manish from CitiXsys Technologies and I will be discussing the different strategies in which the margins from a post season sale can be increased.Retailers today operate on wafer thin margins and inventories and stock form their biggest investment in their businesses. While on one hand retailers are expected to adequately stock their stores to avoid stock out situations, on the other hand they are also faced with the challenge to plan their inventories in a manner that they do not land up with excess inventories. Maintaining this delicate balance becomes more challenging immediately after the festive season when the retailers have to dispose excess inventories and still maintain healthy margins. Apparel retailers have to replace their fall winter collection with the spring summer collection, Music stores have to replenish their inventories after the Grammy awards, Sport Goods retailers have to plan for the fast approaching spring season; Irrespective of the line of business, all retailers have to quickly and efficiently keep churning their inventories.
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The presentation today has 2 borad sections – the first one where we talk about the 6 diff strategies and the second one where we talk about how best to plan for the coming year.
So.. We are at a time when the festive season has come to an end and a typical retailer still has some excess stock that he would like to sell – all without compromizing hugely on the margins. And the first strategy to ensure that one does not compromize on the margins is by figuring out how much stock is lying in which all stores. Seemingly obvious and simple the exercise may sound, this is one of the primary challenges that is faced not only be a mid-market retailer, but also by the large retail chains. Once this is done the retailer must carry out the FSN and the ABC analysis. The FSN exercise will let you know the fast moving, slow moving and the non-moving items. Now, this FSN analysis is to be carried out in conjunction with an ABC analysis. ABC meaning A class items – the most expensive ones, B class items and the C class items.The best and ideal situation for a retailer is where the F class items are also the A class items. At the end of this exerice, one knows what sells and what does not.
Having done the FSN and ABC analysis, this exercise should be exploded – I mean should be detailed at the store level. The objective of this exercise is to find out what items are NOT selling across which all stores AND not to find out what is selling the most.We need to do this to identify all those items that need to be pushed out of the door. Moving on – we need to segregate all those items which are preishable in nature – these items will typically be batch controlled. We want to put these items in front and run aggressive promotions around these – more on promotions as we go alongHaving idetified all that we want to sell more and soon, we continue math, for and find out the exsiting margins that we enjoy on these items. More importantly we need to conduct a margin protection exercise to finalize the minimum margin below which we cannot sell these non moving items. Finally plan for the markdowns – obviously we will have to markdown these non-moving items – but only to a point beyond which it will start hurting us.
Promotions are not a bad thing. Customers love them. There is always more inventory turn over during promotions and sales than in the peak season. By their nature, promotions always tend to increase footfall, the market share and of course the revenue. I would agree that the margins may not be very healthy, but we are still able to turn the stocks. Promotions are broadly of three types:Buy some get some – a typical example would be buy 3 shirts and get the fourth one for free (or lets say at 50% discount)Promotional sale discount on the total bill value – buy for 200 dollars and get 10% discount on the total billAnd finally – volume discount – buy 4 pieces and get 15% off But a very important piece in the overall game plan is to let everyone know that you are running a promotion – again there are many ways to doing this – the most recent and one of the most effective one being – leveraging the social media.
Contact your local CitiXsys office for more information and find out how you can partner with a winner.Thank you for your time and attention and have a wonderful day.I believe we will open the lines for questions….take it away …..
6 ways to maximize profits from a post season clearance sale
6 ways to maximize profits from a post season clearance sale through effective inventory management<br />
About Us – CitiXsys Technologies <br /><ul><li>Business Drivers
Products for SAP® Business One in Retail, Warehousing, Distribution
Largest SAP® Business One Services Partner in the world
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Operating Locations in US, Canada, UK, Australia and India
700 seat R & D and Support Center in India</li></li></ul><li>About Us<br />The 6 strategies<br />How to plan for next year?<br />Agenda<br />
Get to know the exact stock levels across the enterprise<br />Execute an ABC and FSN analysis by store<br />ABC analysis is by the items MRP<br />FSN analysis is by the speed of sale (Fast, Slow, Non – moving items)<br />You now know what sells where<br />Strategy 1 – How Much is Where?<br />
Results of FSN by ABC analysis to be exploded to the store level – to understand what sold the most at which store<br />Segregate perishable goods from non-perishable ones – you want to sell them first<br />Identify the existing margins <br />Execute the margin protection exercise<br />Plan your markdowns<br />Strategy 2 – What all to put on sale<br />
Promotions are a strategic tool to increase:<br />Footfall<br />Market share<br />And of course – revenue<br />Promotions are broadly of 3 types<br />Buy some Get some<br />Promotional sale discount on total bill value<br />Sale and Volume discount on number of items bought<br />Advertise in:<br />Local Print Media<br />Social Media<br />Strategy 3 – Plan Promotions & advertise<br />
Psychologically one tends to buy what the mannequin is wearing<br />Place the item in an eye catching position in your store<br />Balance the display<br />Place the darker items near the bottom of the display<br />Uniform lighting<br />Should not be only from one direction, but uniform<br />Remove the clutter<br />Make it easy for the customer to move around<br />Strategy 4 – Effective shelf display<br />
Get in touch with your most regular customers – send mailers<br />Additional points for shopping at specific hours<br />Additional points for buying specific items<br />Club promotions with loyalty schemes<br />Run additional commission schemes for sales staff<br />Strategy 5 – Loyalty Schemes<br />
Post season sales result in heavy footfall<br />Minimize pilferages by:<br />More frequent stock takes – preferably daily<br />Analyze sales trends more closely across stores<br />To ensure effective stock turnover<br />Timely intervention to fine tune stock levels and promotions <br />Strategy 6 – Frequent Stock Takes<br />
Put an OTB (Open To Buy) plan in place<br />Create sales plan based on previous sales<br />Create budgets<br />Execute monthly OTB runs<br />Put an BI (Business Intelligence) tool in place<br />Analyze sales trends over the year<br />Timely fine-tune sales strategies<br />Put a forecasting application in place<br />Create accurate sales and merchandize forecasts<br />How to plan for next year<br />
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