Friday, July 6, 2012
Q: I have a question about inventory and vendors. I have a list of wonderful, possible vendors, each who have things I love and would like to include in the store. How do I decide whose products to carry, and how much do I order from each? I see that you spoke to this in your blog earlier ~ is it just ordering from vendors and seeing if things fly off the shelf or not? I'm just starting out, so I don't want things to look too sparse, and yet, I don't want to be overloaded with inventory! It's time to start buying ~ I'm excited, but I want to be smart about it.
A: This is obviously a new venture for you if you do not know exactly how to order (do any of us?) but let me try and take some of the anxiety out of it for you.
First off: ACCEPT YOU ARE GOING TO MAKE MISTAKES!!! If all the vendors I ever ordered from were producing mass profits for me- well, I would be writing this from my custom built cabin on the lake. Second: Know what kind of store you are. Your style (your brand) is everything and should always be at the front of your mind when making any decision about your store.
Buying product will always be a learning process as you find that happy medium between:
1. what you really want to carry -vs- what your customers are wanting and buying
2. what your competitor is carrying next door
3. the price point
4. the profit margin
5. the current trend
6. the season or shelf life
7. the vendor minimums
8. will it sell fast or is it an item with a slow turn
9. if you changed your mind about the style, quality or design
10. the other similar brands you have in the store to this one
11. if the item has lost it's luster after carrying it for awhile
12. Your location or demographics
A lot to think about each and every time you order anything; from a $2.00 sachet to a $2,000 sofa. Consider the departments you have, for instance:
Soap (Bath & Body)
- or whatever departments fit your style of store.
I think the experts might tell you to cover the basics with a low dollar item, a medium and a high price item in each category. But if you sit and do a chart with this formula, you are apt to go nuts as I have tried it many times and it gets thrown out. But since you are ordering for the first time, this formula might be wise. Another way to see it instead of with price range is in subcategories: Like this:
Say in the jewelry department you want a little of everything: So you order $300 of gold color, $300 of silver and $300 of color. That is another way to look at it. Or in soap you have decided to only carry 3 scents. Then you can buy various products from different vendors in those three scents. Maybe this isn't you at all, maybe you like variety. You want shots of color around the store so you order candles in 8 different scents but just one size (not 3 as the vendor may offer) and you make a colorful display with them and show the variety.
Retail experts may also tell you to chart out low ticket items, medium price and high luxury items and give each one a percentage of what you expect it to sell. Items under $20: order 50% of your overall budget in this price category, $20-50 items: 30%, $50-100: 15%, over $100: 5%. Now if you are like me I lost you when you saw the first percentage point. But, again, this is another way to order and I am sure the Wal-Marts of the world order using a formula something like this. But we are small shop owners. Just one of us, no lawyers or accountants over our shoulder everyday telling us how to do this. We need to learn the hard way; trial and error. So my advice, don't experiment too much. Would you buy this item in your store for that price? That is one of the best questions you can ask yourself.
As I write this I can see myself tackling this strategy and for me it's ALL ABOUT THE STYLE of the item and the style I want my store to have. When I order anything I think about a bigger picture: Is this what I want the store to look like? Does this label match my brand? Does this shape look like Curious Sofa? Does this color go with the palette of my store? I am not a color person (I think too much color in a retail store is confusing and looks messy- but this is just ME and part of what I have created). Then I get into the item itself. The price, the quality, the scent, the texture, the season, etc. As with every part of your business this needs to be about YOU. What do you like? What do you want? What pleases you? Being smart about each and every item helps. You do have to think all these things through and no, I cannot order everything I want to carry (I long for a store like that) but I have to compromise and buy what fits within my brand, the direction of the store (who we are), please the customer and make a profit.
Since you are just starting out, start with 3 items in each category, buy minimums, buy cheaper... see what your customer is asking for after you open. Also buy something here and there with a WOW factor. Something no one else has or something that is really you. You must do something to make you stand out from the store next door and it should be a combination of display, product and customer service.
In summary, a long running retail buying strategy goes like this: Buy 33% of what you love, 33% of what you hate and 33% of what sells. I swore I would never buy anything I didn't love, but sometimes you have to make money!