The beginning of May marks the end of the first fiscal quarter (February through April) and is a critical time to take stock of your business. How you respond to insights gleaned from the first fiscal quarter in the coming months can determine business performance for the rest of the year. Here are some questions to reflect on:
How current is your inventory? Retailers typically spend the first months of the new year marking down seasonal inventory from the previous year. Depending on how well you had planned your Fall holiday purchases, you could spend the first months of the new year with the unpleasant task of liquidating old stock. This is not only detrimental to your profit margin – it also leaves fresh Spring inventory idling in the warehouse. Consider holding old inventory until seasonally appropriate to sell so that you can focus on full-priced sales of fresh inventory. A more aggressive clearance – or even postponing some purchases – might also be required.
What does your product mix look like going into the summer months? The period from May to July is a good opportunity to offer your customers merchandise appropriate to the weather and particular holidays here in the United States. In apparel, this might be lightweight dresses in womenswear or knit shirts in menswear. More than half of your revenues in the first half of the year will come from the summer months – your product mix should reflect that.
Are you prepared for a profitable summer clearance? The second fiscal quarter might end in July but the dog days of summer dwell long into August and early September. Customers may be happy to look at the latest in Fall merchandise but their purchasing decisions are made in the here-and-now. Unlike the January clearance period where you might be liquidating costly Fall merchandise, the summer clearance period presents unique opportunities for savvy retailers who stock up on high-margin items like basic sportswear and home goods. Properly engineered, your summer purchases could boost profitability in what is traditionally a lull in the third fiscal quarter.
Take stock of your business now, respond appropriately – and you too can enjoy a vacation in the summer.
What actions will you take in the coming days and weeks? How did this article shape your thoughts? I invite you to share your responses with me at wei@thisisthewei.com.