How to Determine Your Store's Open-to-Buy
When deciding on your store’s open-to-buy, there are a lot of factors to take into account. First, consider department needs AND sales growth challenges. Read on for more tips!
What is open-to-buy?
An open-to-buy is a critical tool for successful retailers. It is a thirty thousand foot view of inventory control. Open-to-buy takes into account your sales and inventory on-hand figures to order and reorder product (by department, category and individual item).
Your job as a buyer, is to steer product selection that keeps customers, staff and volunteers engaged and sell more product every day. Carefully analyze your store’s daily/weekly/monthly sales figures. Look at how your budget is divided among your various departments, all while taking into account expected sales and existing stock.
Why is open-to-buy important?
Whether less formal or highly structured, an open-to-buy is one of your most powerful tools to increase product turnover and store profit. Maintaining an inventory level that fits your anticipated sales for a specific time period (and ordering and implementing markdowns according to this plan) will improve sales volume, cash flow, and visual presentation in your stores.
Carefully figure your open-to-buy before you ever step foot on the tradeshow floor. Develop a budget -- how much you want to spend and on what categories. It is important to do a quick inventory and put together a shopping list prior to attending market. This exercise will keep you focused what product holes need be filled, & to not overspend a particular category.
Tips for a roomier open-to-buy:
No matter what type of store you operate, we all have challenges with expanding our open-to-buy with our finance departments. You can’t grow if your budget is too tight! You can’t buy more if you are over-bought in other departments. Plan carefully!
One suggestion is to auto-replenish the “basics” that consistently, routinely turn. Carefully take these figures into account, and you may just find more room in your open-to-buy.
Consignment may be a resource to expand your merchandise without paying for it until it sells. Finance departments may want to avoid consignment complications: who is financially responsible if something gets broken, shop worn, or stolen? Manage the inventory and prevent these problems, by having a clear and firm system in place.
What if you are inventory-heavy with in-house books and catalogs (which skews how your inventory is viewed)? See if you can move these items out of inventory and brought in as-needed to the selling floor. This “right sizes” your sales figures for a more accurate picture which categories are selling strong, and most profitable.
How to approach challenging scenarios?
- Board or executive director “wants” merchandise that you don’t suppose will sell
- Employee costs (which are higher than ever!) affect profits, and in turn affect open-to-buy
- Forces outside your control, i.e. a closed major exhibit, weak exhibit, or abnormal weather
Blue Anderson, Director of Visitor Services, Columbia River Maritime Museum in Astoria, OR
Ms. Anderson is the director of visitor services at the Columbia River Maritime Museum in Astoria, OR. Additionally, she serves as a board member of Museum Store Association. While her expertise is focused on non-profit stores that are part of a larger institution, the principles and considerations still very much apply to ALL retail stores.
