Sunday, November 29, 2009

Buy to a Strategy

The Merchandise Buy Plan Guide explains the homework and process involved in determining the proper levels and turns of inventory, categories and vendors. It is written generically enough to apply to any pro shop or retail situation. It does not discuss the need to be strategic with the choice of product and vendor as this is obviously different per shop.

The blueprint for your shop’s buy for the coming season may be the most important you have ever made as two things are true.

1. The experts aren’t expecting the current financial crunch to potentially start to heal itself until mid year 2010 at best.
2. Retail has changed dramatically over the past year and while it will recover with the economy the consumer’s enhanced quest for value will be long-lasting.

Retailers who aren’t aggressively going after the business are perceived as not interested enough to be competitive and are not being taken seriously.

I have had this conversation about consumer expectations with many of the major golf-vendor captains and the underlying suggestion is that pro shops need to be diligently ready to take markdowns that will turn inventory as that is the state of the industry. This is true to some extent but to my way of thinking should never be the overriding marketing principle especially since none of the captains mentioned above explained where the lost margin was going to come from. Said another way, old merchandise obviously needs to be reduced and removed but the buy plan should be built around a schedule designed to inspire the consumer not with markdowns but with promotions that are fun, easy to sign and talk up and where the lost margin is minimal and part of the plan. When you limit the vision in your grand design to the sale rack you teach your customer to wait until the merchandise is old before buying. This is not stratagem but defeatist merchandising that creates a downward spiral that is tough to reverse.

The schedule of promotions should be manicured to your customer climate and particular shop layout. Some of the important considerations are:

· What product will be inspirational?
· What vendors will work best with us?
· What category needs help?
· What will look best front & center and be the most customer friendly?

After these concerns are well thought through, the schedule could look something like the following which you will note never mentions percentages off and could become an occurrence that regular customers look forward to:

March, April – Buy a shirt and receive a free hat or perhaps a sleeve of balls

May, June – Buy two shirts and pick out a free pair of shorts

July, August – Any $100 purchase and pick a shirt off the sale rack for free

Sept, October – Any purchase of outerwear and take a pair of winter glove

November, December – Any $100 purchase receives free gift wrapping and a $20 gift certificate for that “other gift”.

Let’s look a little deeper at this schedule.

March, April - Caps can generally be bought for $5-$6 - less than 10% of an $80 shirt. Off-shore deals on caps require larger minimums but a lot of the initial commitment will go away as the result of a successful promotion. There is certainly never any lack of golf balls on special. Shirt vendors may take interest in your effort and help with marked-downs or early in-season off price. Perhaps you introduce Private Label shirts from Pima-Direct where the extra margin needed is built in to the suggested retail price.

May, June – Memorial Day, Father’s Day, etc. – shorts to golf-in season.
Many companies come to mind here, but Greg Norman, for example, has a program that reduces certain in-line shirts by 30% and allows you to buy $24 shorts for $17. Losing $8.50 per 30% off shirts by giving away a pair of these shorts yields 43% margin and is perfect for that center table and inspiring even to the consumer who typically buys his shorts at outlets. Nothing motivates like free. The important thing is that the price of the new spring shirt has not been compromised. The sale rack is in the back room only to be brought out strategically and the consumer is confronted with a proposal that is intriguing at worst.

July, August – Any residual shirts from the spring buy become the sale rack. New shirts for summer renewal should always be bought off-price anyway. Proper vendor relationships help this effort dramatically and will be the subject of a separate entry.

September, October - Think about giving winter gloves as a tournament favor and keeping the balance of that buy as a shop promotion while receiving a tournament discount.

November, December – Holiday business is a great time of year to be creative but many pro shops don’t want to buy special goods this time of year as much as they want to reduce existing inventory. There is no better way to do this than to use gift certificates to your advantage.

Your promotional strategy after thoughtful consideration of your particular shop may be quite different from that described above but the thought process will be the same. This type of promotional schedule combined with a merchandise buy plan based on sound retail principles of space and turn should be adhered to and become the focus of the shop. Participating vendors need to assist with discounts, point-of-sale material and education of your staff to maximize their ability to discuss the promoted products and advance promotions in general.

The next blog entry will discuss the past year in review but probably the most glaring aspect of this season's business was that shops that promoted maintained their volume and in some cases were able to wow their customer. The shops that didn’t have the vision to be aggressive with the times went backwards and those using markdowns as their only form of vigorous marketing lost considerable margin that will now be hard to recover.