HOW SHOULD RETAILERS PLAN FOR THE HOLIDAY SEASON?
Q: How should I plan for the holiday season, given that COVID cases are surging again and the stock market has jitters after receiving disappointing employment data?
Steve Pruitt: The short answer is to be careful. So far, at least, our stores are holding their trend lines. In fact, most of our stores are beating their sales plans for the month, as well as their 2019 numbers. But we know there will be a slow down; the question is when.
For now, make the most of the business you have. We have never seen demand extended for so long before. Keep a close eye on your aging inventory index, which tells you if your turn is slowing, as well as your receipt plans.
If your open-to-receive gets into negative numbers more than 60 day out, pull it back. You have learned to run your business on lean inventories. If you get overbought your cash flow will dwindle, putting you in a weaker position when sales slow down. Getting stuck with too much inventory will also eat into your margins.
It’s best to pull back a little and wait until you have a better idea of where the trends are heading in your market.
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Our strategy was to use the expected significant drop in suits/sport coat/dress shirt/neckwear volume as an opportunity to seize the day with sportswear brands we had not yet added. In February, when orders were being placed, nothing had happened to prove us wrong.
But, driven largely by weddings for a combined two years and some men going back to the office, those elements of the dressier part of our store ignited, while the heavily ramped up sportswear killed it, too.
NOW……I’ve NOT been careful. I have added MORE brands and increased the brands that did so well last fall and spring (everything I bought, matter of fact). I’d like to tell you that I’m supremely confident, but you’ll note, I am NOT telling you that. Nothing that will hurt us badly, but definitely “assertive”, as I intended it to be. Personally, I absolutely felt and feel that this Fall was anything BUT the time to be timid. That doesn’t mean that I think Mr. Pruitt’s advice is wrong…
Best wishes for 4th quarter to all independents as we near the end of the third.