Closing Strong
Key Observations on Retail Success in the Second Half of 2023
We have now passed the first half of the year and I have three general observations. This is based on poring over a significant cross-section of data from multiple verticals, speaking to several Management One Retail Experts and talking to a number of retailers. There seems to be a consensus. Results vary, but the general results remain the same.
We have seen overall price increases at retail from 15% to 60% varying by classification and vendors. These increases compare retail prices from 2021 to the current spring / summer season. This has translated into increased revenue and increased cash margin. Ironically, retailers have increased their margins even as their direct costs from wholesalers have increased.
There is a significant group of retailers that are either down a few points in revenue or ahead slightly against last year but are enjoying equal or greater cash margins than a year ago. These retailers all have one thing in common: significantly less purchases this year than last year. They are aggressively getting out of non-performing goods and are entering fall in good shape. Markdowns work well when being aggressive.
Top-performing retailers went deep into the styles and categories they believed in, they flowed goods in throughout the season where possible and stayed fresh as the season progressed. Of course, this is dependent on deliveries. These retailers are enjoying double-digit increases for the first six months. Retailers that left themselves chasing goods had a more mixed result. Top-performing retailers also worked hard not to be over-vendored; they went deep where they felt they had opportunities and did not leave themselves over-assorted with broken styles resulting in steep markdowns.
The story here is to find those items that you believe are the right stuff, and go deep, and ensure you have timely deliveries.
Fall deliveries are upon us. There is still time to make sure you are not over-assorted or carrying too many vendors. Having too many vendors creates duplication and confusion for the customer. Any vendor that is less than 10% of the buy for a classification needs to be seriously reviewed.
Finally, the squeaky wheel wins. Make sure deliveries of fresh goods remain uninterrupted and stay on top of cancellation dates. Be in control of managing your inventory.
If you have any questions feel free to schedule a meeting with me.
Onwards, and Upwards,
Marc Weiss - Co-founder, Management One