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How to get +43 per cent in gross profit
Thierry Bale takes a look at the science behind buying. 

Thierry Bayle

1 September 2016

Right now you’re probably reviewing your sales performance over the Summer and planning how best to approach the last quarter of the year. Before you roll your eyes and cite the terrible weather in June and early July, let’s just focus on the buying.  Successful buying is a mix of art and science.  The art is the buyer’s instinct for what’s hot in the coming season; the science part is how much to buy and when to bring it in.

I’ve been looking at the results for one of my clients over the Summer.  We’ve been working together for a year.  Here are his results for July 2016 compared to those for 2015: 

                                                          2015    2016

Number of items sold                   856      857

Sales                                                +25% compared to July 2015

Margin                                             +43% compared to July 2015

Mark up on goods sold                +15% compared to July 2015

As you can imagine, he’s delighted and his comment was "Now I understand why we talk about the Science of Buying". 

Here’s how he improved his profit:

·         Unlike many independent stores, he now tracks sales and stock by product category and then by Brands (not the other way around) and he sees the power of doing that.  After all, customers tend to buy by product category first and brand second.
 
·         Unlike many other stores, he does not put 100% of his budget in forward ordering.  He ensures that whatever he buys on forward order is delivered monthly throughout the season.   This way, his stock remains fresh, keeping both his customers and staff interested in what’s on the shop floor.
 
·         Unlike other stores, he buys fresh goods in the second half of the season and was still buying SS2016 goods in July (at a discount and therefore maintaining his margin even when he was heavily discounting the goods). 

This is why he got a 43% increase in gross profit.

Happy retailing.

Thierry Bayle
Founder, Global Fashion Management
Tel. 020 8576 6233
www.globalfashionmanagement.com
@RetailFashion

 
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