When is it a Good Idea to Overbuy?
Q: I read your column in MR and have a question. You suggested that once we get out of this extended cold spell, business should be pretty good. Do you still believe this? Also, if business is going to be okay in the fall, are there any categories I should overbuy in?
Steve Pruitt: Yes, we still believe business will be pretty good once the weather breaks. Secondly, be careful when it comes to overbuying. There are times when it is appropriate to increase purchases over current trend projections, but only under certain circumstances.
Here are a few requirements:
1. Do you practice tight inventory management now?
2. Are you in a position to take financial risks?
3. Do you have experience in selecting increases over and above the trends?
4. Do you have categories that have been under-performing that are starting to trend?
If the answers to all these questions is “yes,” there may be opportunities for you to exceed current growth trends. Here is one way to start: Identify a category that you believe has opportunity. Establish a revised sales plan, by month. Make the required inventory plan changes and then follow your OTB (open-to-buy) plan. This is important — too many times I see merchants identify an opportunity and just buy a bunch without thinking about what sales are required to make it work. I hope that helps.
