Data is our Friend
When meeting prospects for the first time, I was often struck by the nature of their decision making process. Two aspects come to mind…
First, what they learned that worked for them in their first year of business never changed and for the duration since have been polishing the apple. Second, they have a few heuristics, rules of thumb, they follow that they use to make their decisions.
Some heuristics are good, like looking both ways before you cross the street, others are flat out wrong. For example, left handed people are more creative and brighter. Since I am left handed I can attest to that not being true.
Management One Retail Expert, Audrey Watson, recently sent me these rules of thumb she hears from clients and prospects:
I front load the season so the customers know we have it
There are some classifications and some verticals that only have 1 to several deliveries a year. So this is partially true. However a good classification structure should be built to enhance these vendors so that fresh goods in other classifications that align can be achieved. Those supporting classifications drive core vendors and help grow the business and fuel fresh goods driving new traffic.
I'll overbuy in my major/best-selling classes because "I can't get hurt" [I will sell them eventually]…
This is also partially true . It is good to invest in best selling classes. It is important to define best selling. Is it the most profitable at the end of the season after markdowns? Has the trend changed to other classes where you might be missing other opportunities? Classifications are evolving and what worked last year might not be true for this year.
Not being aggressive on markdowns in over-inventoried classes because "I don't need the money"
Indie retailers are in business to turn inventory profitably. Unsold inventory clogs up open to buy. A fresh flow of goods is imperative to sustain growth and fuel customer demand. It is easy to burn cash and what you have today may be gone tomorrow. I would suggest if you don’t need the money , donate the inventory to a charity. You can take the deduction and help others that are less fortunate.
I will continue to overspend, fly blind, and lose money because I don't have computer skills and I can't learn, or change to make my business profitable
Your competition loves you and they thank you everyday.
Data is everywhere. We generate data every time we use our POS systems, phones, browse the web, shop online, or interact with others. Data can tell us a lot about inventory and our customers.
How can we use data to make better decisions?
One way is to use data analytics, which is the process of transforming, analyzing, and interpreting data to find patterns, trends, and insights. Data analytics can help us answer questions such as:
Who are our most valuable customers and what do they want?
How can we improve our products or services to meet their needs?
How can we optimize our marketing campaigns to reach more potential customers?
How can we reduce costs and increase efficiency in our inventory?
How can we predict future outcomes and prepare for risks or opportunities?
Data is our friend, but only if we use it wisely. To make the most of data, we need to have clear goals, ask the right questions, choose the appropriate methods, and present the results in a compelling way. Data can help us make better decisions, but ultimately, we are the ones who decide.
I like this quote from The Decision Lab:
“Heuristics (rules of thumb) are mental shortcuts that can facilitate problem-solving and probability judgments. These strategies are generalizations, or rules-of-thumb, that reduce cognitive load. They can be effective for making immediate judgments, however, they often result in irrational or inaccurate conclusions.”
The beautiful part of Management One is that they have invested over 35 years in measuring the decisions retailers make on their inventory. They measure your rules of thumb and place you in a better place to mitigate risk, by taking the right risks. They exchange guesswork for informed decision making, while not losing the art of the buy.
Wishing you all a very happy holiday season!
Onwards and Upwards,
Marc Weiss
Co-Founder - Management One
You can also contact Management One directly for more information. We are always happy to discuss your results and share solutions for you and your indie retail business.
