At daVinci retail, we understand the importance of effective inventory management in Assortment Planning. Retail winners understand the significance of a strategic approach to Open-to-Buy (OTB) planning and the need to allocate their assortment budget judiciously. They plan by keeping a reserve so they can make purchasing decisions based on sales trends as they happen. This approach can significantly improve your ability to adjust to customer needs and profitability.
Recent industry news articles shed light on the challenges faced by major retailers and how strategic OTB management can help overcome them:
1. Neiman Marcus: Overcoming Excess Inventory Challenges
A recent Retail Dive article revealed that Neiman Marcus faced gross margin pressure in the third quarter due to excess inventory, which led to increased markdowns and reduced profitability. By adopting a proactive OTB approach and making weekly purchasing decisions based on sales trends, retailer winners can minimize the risk of overstocking and lessen the financial impact of excess inventory.
2. Nordstrom Rack: Addressing Sales Decline and Earnings Loss
Nordstrom Rack’s first-quarter earnings highlight a decline in sales and increased markdowns. By closely monitoring sales trends and utilizing a reserve from the OTB budget to buy inventory on a weekly basis, retailer winners can more effectively manage their product mix, mitigate stockouts, and avoid missed sales opportunities.
3. Macy’s: Demonstrating Inventory Discipline and Q1 Earnings
Macy’s inventory discipline has made positive impact on first-quarter earnings. Macy’s credits its focus on optimizing inventory levels and making data-driven buying decisions, which resulted in an improved financial performance showcasing the power of strategic OTB management in driving profitability and success.
Strategic OTB management provides retailers with numerous advantages:
Flexibility: Adjust inventory levels and assortments based on real-time sales trends, ensuring that popular items remain in stock.
Risk Mitigation: Reduce the risk of overstocking and minimize markdowns by making informed purchasing decisions aligned with customer demand.
Cash Flow Optimization: Allocate the budget gradually, matching expenses with revenues, and enhance overall cash flow management.
Enhanced Customer Satisfaction: Meet your customer demands by avoiding stockouts to improve customer loyalty.
Data-Driven Decision-Making: Leverage valuable insights from sales data to make informed buy decisions, optimize pricing strategies, and enhance overall merchandising efforts.
Let daVinci help you with OTB planning and retail merchandise management. Our retail experts can help you develop a tailored approach that aligns with your business goals, utilizing data-driven insights and industry best practices.
Remember, success in the retail industry lies in strategic planning, proactive decision-making, and staying ahead of the curve. Embrace the power of OTB management and witness the transformative impact on your business.