How to plan a retail season
Planning your retail season means you’ll know exactly what mix of products you need to order (or make!), and in which quantities. It means you’ll know how many you expect to sell and at what price point, so that you can hit your sales and profit targets. And we’re right here to tell you exactly how to plan your next season.
There are two tools you’ll need to make this magic happen.
Our Sales Tracker records all your raw sales data so that you can look back on it when you’re planning your next season.
Our Range Plan tool looks at exactly what your next season’s product ranges should look like for optimum sales and profit.
Use them together to leave the guesswork behind and make confident decisions for your business.
First up, look at what happened last season
This is where your Sales Tracker becomes invaluable. When you accurately record all your sales, you’ll start to see a shape emerge of how your business performs over a season.
You’ll find this shape in the Sales Tracker summaries tabs. These show you the mix of products you sold through the season. For example, dresses might have made up 10% of your sales, t-shirts 5% of your sales, etc.
When you’re looking at the summaries, it’s important to look at both sales and profit. That way, you can spot potential opportunities!
For example:
If you have a profitable line that didn’t make loads of sales, what could you do to increase sales?
If you have a line that makes lots of sales but at a lower profit, could you increase the profit margin on those items by renegotiating the cost price with the supplier (perhaps you could get better value by placing a bigger order?) or by increasing the selling price (potentially selling fewer units, but making more profit).
Learn the lessons from last season
The information in the Sales Tracker, along with your own experience, can help you focus in on what went well and what didn’t, along with ways to address those learnings for the coming season.
You might ask yourself questions like:
Which products were your bestsellers in terms of units, cash and profit? And which were your worst sellers?
Did you run out of stock on any items? If so, could you buy more next year?
Was the price of any items too low or too high? Can you (or should you!) adjust the price next year? A lower RRP will generally mean buying more units, and vice versa with a higher RRP. Competition comes into this as well.
Did you increase a price, but see sales drop back too much as a result? Where’s that sweet spot of price between the two?
Did a lot of products come back as a return? If so, why? Was it a fit issue that’s now been resolved? Or a problem with quality, which means you’ve discontinued the product?
Did a key trend not work for your business? What could you learn and how can you adapt?
Did selling items in multiple colours or sizes split sales?
Did you try a best seller in a different length and that didn't work?
Did you try a product variation which had previously been a best seller but didn’t work in this colour?
Did your warehouse have issues?
Did postal strikes cause problems and mean you had less selling time as customers stopped buying earlier for key dates?
How about marketing? Did you spend a lot last year but plan to spend less this year? Or do you have a bigger marketing budget this year?
Did you get some good PR and that might not happen again next year? If so, you need to strip the impact of that on sales out.
Will you launch a new range this year? Is it incremental or will it take sales away from another area?
Have you lost a supplier meaning you can't get certain products? Or have you had to move production so your lead time is longer?
The questions are endless (sorry). But they’re well worth pondering.
Next, work out what you think might happen next
Once you have a good idea of what’s happened before, you can start to predict what shape the next season might take.
You’ll build this shape by looking at:
the shape of last year’s season in terms of the mix of products and sales by month
any decisions you’ve made after looking at your lessons learnt
your overall knowledge of your business, and
macro influences like the economy, wider trends or upcoming events.
And then use ALL that to create a plan.
And this is where your Range Plan comes into its own
Now that you’ve predicted an overall shape to the season ahead, you can start to identify opportunities and risks and decide on your mix of sales and options for that season. We take you through this step-by-step in our free Range Plan resource.
The trick to building up your range of products for a season is to think about it like building a house. Bear with us.
Your core, volume products are the foundations. They hold your business up.
Important products like seasonal bestsellers and staples form your walls, doors and windows. The house wouldn’t be a house without them.
Your small quantity, interesting products are the finishing touches of your interior design (hello fancy curtains and sparkly doorknobs). These are products you might not buy many of, but which give you a talking point and get you noticed. Think trend items you buy in small quantities.
Remember, increasing profit doesn’t have to come from growing your sales. It’s more about getting the mix of products and their profit margins right. We’ve actually been known to increase profit and improve cash flow for a client by reducing their sales plan!
You can then use your Range Plan to plan out your product options, adding in the stock you already have from previous seasons, along with what you need to order (or make), so you can work out what you could sell at full price.
The Range Plan summaries will then help you see where things look about right, over or under, so that you can then go back and tweak the details. Like many things in business, planning is an iterative process, so you might find your ‘topline’ view changes once you add the product-level detail.
BUY BUY BUY!
Yep, after ALL that planning, it’s time to get buying. And for that, you’ll need to know how much to buy.
It’s probably easiest if we take you through an example for this bit…
Let’s say you have a dress that always sells well, so you’re continuing it next season. Its selling price is £30. To work out how much to buy, you’ll need to work out a few things:
First, work out the value of how much closing stock you need. If you’re selling an average of 20 a week and it takes 4 weeks to get more stock, then in theory you always need 20 x 4 = 80 units. At £30 RRP, that’s £2,400.
Next, look at the value of your expected sales. How many do you think you’ll sell in the period you're planning for? In this case, you sold 600 last year and think you can sell 750 units next season. At full price, that’s £22,500.
Now for markdown. Last year you took 10% markdown to full price sales, but you ran a good promo and will do the same again. Using this assumption, you can work out that you think you’d have a £2,250 markdown spend, taking your overall sales to £20,250 (sales minus markdown).
Let’s build in returns. How many dresses do you think you’ll get back? In the past, it was 15%, but you’ve tweaked some issues with the fit, so reckon this will drop to 12%. 12% of £20,250 is £2,430.
We all hate stock loss, but we can’t ignore it. How many dresses do you think you’ll lose or have to write off? Let’s say the figure currently sits at 1% and you expect that to stay the same. 1% of £20,250 is £202.50.
And finally, your opening stock. You’re currently expecting to have 100 in stock at the start of the season. You could use your sales forecasting tool to see this in detail for your key lines. 100 units at £30 means an overall value for opening stock at £3,000.
Once you know all that, you can calculate how much to buy:
Closing stock (£2,400)
+
Sales value (£20,250)
+
Markdown (£2,250)
-
Returns (£2,430)
-
Stock loss (£202.50)
-
Opening Stock (£3,000)
=£19,267.50As the selling price is £30, that means you buy 642 units (rounded down to the nearest whole dress).
In a big business, we call the amount of cash a buyer has to spend on product “Open to Buy” (OTB). The example above looks at how much you need to buy in cash. You can do the same calculation for units rather than cash, if you prefer – just leave out the markdown part of the calculation.
If we hadn’t factored in markdown, returns, stock loss etc., you might have bought many more units than you can actually sell. And that would have damaged your cash flow, led to you holding excess stock and meant higher warehouse storage fees.
So you see, a little time planning your season turns into more cash in your pocket.
Happy season planning!
