What and how much to buy? : Understanding how to manage your inventory
So you’re on the road to opening your first boutique or you’ve owned your fashion exclusive shop for some time now, but you still have yet to master the balance of the right inventory at the right time. Even the most tenured fashion mavens have experienced a bump in the road once or twice. The key is simple, have a system and stick with it. Take some best practices and time-honored traditions and incorporate them into your business model for success.
Maybe you find yourself wondering about the following: Purchasing budget, Open-to-Buy or just how much to spend? How to know what to purchase? Before you’re jetting off to the coast to visit the showrooms or a trade show - you’re going to have to do some prep work. You’ll want to do your research on the upcoming season. Be in the know, and look into the following: What are the styles, colors, and must-haves in your categories? Are you subscribed to great industry resources such as WWD or Accessories Magazine? Thanks to technology, we can do research in many different ways. Social media is also another fantastic tool, so be sure to take time to explore Instagram, Facebook, Google, and Pinterest. There are several tricks of the trade.
Now that you are well in tune with the upcoming seasons' styles and trends, take the time to gather it all collectively into a mood board. Although one of the easiest ways to create your board is via Pinterest there are many different ways. Keep in mind what is the most user-friendly for you when at the boutique or when doing you’re purchasing.
Now that we are well on our way to purchasing the inventory for your shop, you may still not be sure what or how much to purchase. Stacey Brazen with Profit Lab talks about “the rules of 3”.
When purchasing your product mix:
1 style in 3 colors and 3 sizes = 18 pieces
When thinking about how much money is needed to stock your boutique, Sonja Thompkins, the Bricks & Mortar Maven, talks about 3 key elements:
1. Know the size of your selling area
2. The total amount of Categories you have and
3. Your total boutique budget (COGS). Knowing these items will take you down the responsible path of financial stability.
Keep in mind your Open-to-Buy (OTB) formula:
Sales + Ending Inventory – Beginning Inventory = Purchases