9/27/2004
To Market, To Market...
by Kathryn Peacock, Center Director, UAM College of Technology - McGehee SBDC
Many small retailers see retail buying as glamorous. Choosing merchandise can be fun and exciting. Giving all your attention to selecting merchandise--its color, style, design and fashion ability--neglects the crucial first step of determining how much money ought to be spent on various categories of merchandise. Retailing is full of cases of failure by entrepreneurs who were savvy about selecting merchandise for their customers, but who were oblivious to the dollar decisions that must guide buying decisions.
A retail plan helps the buyer make sure there is enough merchandise on hand to meet customer needs, but not so much that excessive markdowns become necessary. Categories of merchandise should be reviewed for profitability. That includes considering markdowns and costs for complementary services required to handle them. Keep external factors in mind--such as weather, state of the economy, demographic shifts, or new competition. Open-to-buy can then be computed from inventory, markup, and planned sales. The Arkansas Small Business Development Center provides free, current benchmark resources on markup and turnover rates for inventory by types of business.
If you’re headed to Dallas Market Center, be sure to click on “New Buyer Kit” at the web link below. Much of this information would help retailers who attend smaller regional markets.
http://www.dallasmarketcenter.com/dmc/v40/index.cvn?ID=10014
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