by Linda Carter
© The Retail Management Advisors, Inc.
email: LC@the-retail-advisor.com
ONCE UPON A TIME . .
Once upon a time a unique men's boutique opened in a lovely little town. The townspeople were
happy the store was there. The owner was a knowledgeable owner who understood who his
customers were and what they liked (more or less) and he tried to satisfy their every need and
most wants. He didn't need any fancy budgets or plans because he just knew.
And his banker said, "Just be careful to plan realistically and watch what you spend."
"Oh, I am", said the owner.
Next year, the owner just knew that his sales would increase between 4-6 %, so he stocked 5%
more of everything. The store looked nice and full and the owner tried to satisfy everyone. He
lucked into a wonderful deal on sweaters and his customers were happy. Unfortunately, his sales
did NOT increase by 5% in every merchandise classification - but his store looked nice and full.
And his banker said, "Just be careful to plan realistically and watch what you spend."
The next year, the owner knew that this year for sure his sales would increase by at least 5%
and he felt that would be probably too conservative, so he purchased 7.5% more of everything.
He also got a great deal on walk shorts and on leather jackets. The store looked nice and full
and he was even able to fit in 2 more fixtures for merchandise. He had a great 40% off
clearance sale at the end of the year. And his customers were quite happy.
And his banker said, "Watch what you spend and plan carefully. Oh, and your line of credit has
been increased, as requested."
The next year, the owner just knew that his sales really would increase by more than 5% this
year (economy is up, it only follows that sales will be too) and he bought 5% more of
everything. After all, most of the sweaters from 2 years ago sold in the clearance sale and those
leather jackets are classic-they never go out of style . . . and I'm a menswear store, I have to
carry underwear, socks and belts . . . all menswear stores have extra merchandise so customers
have a good selection! He had a great 60% off clearance sale. And his customers were thrilled
and they even brought their friends to the clearance sale.
And his banker said, "You really need to plan your merchandise buys more carefully. The board
has declined your request to increase your line of credit."
The next year, the owner was positive sales would go up by 10% and that should have
happened last year also. He got a fantastic deal on dress shirts, sweaters and jeans at market
and will work with his vendors on payment. After all, they've done business together for several
years and they want to keep him as a customer. And besides, this year, he has everything he
needs to make his sales plan . . . . Plus, he's moving casual pants and shirts very quickly; he
can probably get more later in the season when cash flow improves. This is his year!
THE RETAIL MANAGEMENT ADVISORS, INC.
510 Red Oak Street, Allen, TX 75002
1-877-206-1299
www.the-retail-advisor.com
LC@the-retail-advisor.com
Page 2 of 2
He had an amazing 90% off year-end clearance sale. He sold the last leather jackets from the
great market deal of three years ago, and most of the dress shirts and sweaters from this year.
And he got those at such a good deal too. What went wrong? Oh well, his customers were so
happy and they really made the clearance sale a money maker. He did wish that he hadn't
overheard so many shoppers telling their friends that this happens "all the time" since it doesn't,
but he's got more customers now and it's all good. Well, except that he had to take a pay cut,
and he'll have to find a new vendor for casual pants and shirts, and he may just look for a new
bank when he gets time. That will teach that bank a thing or two!
And his banker said, "You need to plan carefully. You are nearly current on your debt now."
The years continued to pass and the owner continued to stock his store always at least 5% more
than the year before and took advantage of many of the special deals at market. He was
surprised to realize that he had been in business 10 years. Wow! What changes 10 years
brought about he thought. He wasn't making quite the profit he had hoped, but in this economy
everything is down, well, except the new store; they seem to be doing a brisk business. His
store wasn't quite as clean as it once was, but it was difficult to get the vacuum between all the
fixtures. And maybe the fixtures were stacked tight, but the back room was full, and, well it
looks okay and besides, he can help his customers find anything they want. Those leather
jackets are really starting to look worn; he thought he had sold all of them a while back. He
wishes he hadn't bought some of great deals, but if they had sold, that would have been great!
But, it's a new year and market is right around the corner so if he can get some funds, he'll
make some major buys. Plus, he'll get to work with mostly all new vendors this year. Things are
really looking up . . .
*
*
*
*
The whole town turned out for the GOB sale. Everyone told him it was sad to see him leaving
while they purchased the last of the leather jackets for $15 each . . . .
If you see yourself at any point in this story, listen to the banker. You need to plan your
expenditures, but especially the largest one--your inventory. If you don't need 200 sweaters,
then it's not a good deal to purchase 275. And while you may enjoy a 30% increase in sales of
casual pants, you may suffer a sales decrease of 15% in jeans. So, plan accordingly. If you need
help, keep in mind that we offer a full-service Open-To-Buy priced for the small and mid-sized
independent retailers. Check out our website and complete the quote form for more information.
THE RETAIL MANAGEMENT ADVISORS, INC.
510 Red Oak Street, Allen, TX 75002
1-877-206-1299
www.the-retail-advisor.com
LC@the-retail-advisor.com