| Kick
the Extra Point
By Evan Wise, Managing Director
of Management One
A
simple 1% increase in Initial Mark Up results in a substantial
increase in Gross Profit.
We can get additional extra points by reducing markdowns.
A reduction in markdowns by as little as 2% can increase
your gross profit by 1% based on a reduction of markdowns
from 20% to 18%.
Great
to say but, how do we do that? Success in retail is
following the fundamentals. Managing markdowns is best
served by playing by the rules.
1. Do not receive goods late. Accepting late deliveries
not only increases the risk of higher markdowns it also
squeezes cash flow. Follow the advice of your affiliate
on landing merchandise. Receiving merchandise on a timely
basis generates revenue by receipts of fresh goods and
gives ample opportunity to sell within a season.
2. Take early markdowns. If styles are not selling after
enough time on the floor, remerchandising and effort
by your sales staff, then slice the price. A smaller
markdown today is better than half off or more tomorrow.
3. Talk to your vendor about slow selling product. Sometimes
they will take it back or swap it out for something
new. Do not be afraid to ask for markdown money as well,
even if you are a small specialty retailer. The squeaky
wheel gets attention. Next time you go to market armed
with your vendor analysis show the sales rep the performance
and ask for an incentive before you place your order.
Consider it a markdown allowance and an opportunity
to make back some profit.
4. Do not overbuy. Your merchandise plan has markdowns
built into the plan receiving. We know there are no
perfect buyers out there. Overbuying opens the door
for additional markdowns.
5. SELL THE EXTRA ITEM ! Every time you and your staff
sell an extra item you reduce the opportunity for a
markdown.
Two
simple tactics of lowering your markdowns and raising
your initial markup can return profits.
REMEMBER-
RETAIL
IS DETAIL….
THE SUM OF DOING A LOT OF LITTLE THINGS RIGHT
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