Inventory Investment is not a game, it is a Business Investment. Even excellent shops (without problems) have an opportunity to become more excellent

It is observed that 75% of small businesses went bankrupt within 5 years. Primary reason is cash flow and in retail, primary reason for cash flow problems is poor inventory management. Inventory is a Business Investment. It should be managed with Business Systems.

Benefits of Business System
1. It uses Technology
2. It does the Calculations
3. They are Automated
4. They are more time efficient, more objective, more accurate, more professional, more productive and more profitable

Business Systems needs to be use to plan Business Investments

Five Inventory Management Essentials / Checklists
1. Inventory Planning
2. Selection
3. Display
4. Sales & Service
5. Markdown Planning

Basket Analysis is a modelling technique based upon the theory that if you buy a certain group of items, you are more (or less) likely to buy another group of items. For example, if a couple aged between 25 and 35 buys some apparel for their own need, they will surely buy something for age group between 0 and 5.

The set of items a customer buys is referred to as an itemset, and market basket analysis seeks to find relationships between purchases.

Traditionally, the relationship will be in the form of a rule

The Customer here is a parent and will surely buy some articles for their kids. This is referred to as the support for the rule. The conditional probability that a customer will purchase kids articles is referred to as the confidence.

Data Mining is the art of exploring new, useful, and profitable relationships in data.

In every retail business, we study what happens in order to improve. We study our prospective customers. We study our actual customers. We study what we do and how we do it. We study whether our sales people are competent enough to bring the sales forecasted.

Primary objective is to trigger out patterns of behavior — forecast outcomes — and turn these into profitable opportunities and ventures.

The past study of such patterns was severely limited by the amount of human effort involved, and by the expense of gathering the necessary data to do the relevant exercise.

But, in the last few years, the balance has changed. More data is readily available to most businesses than ever before. More computing power is available to process that data, and automated techniques that can be used to find patterns in that data with limited human intervention. The entire process have become more matured.

Tracking Store Traffic can help Boost your Retail Sales by 20% or more

Basic Retailing Business Issues
If your retail firm is to be successful over the long run, it must satisfy the needs and desires of its present and potential Customers, these guidelines will ensure you to do the same.

Minimise Shop Theft
Shoplifters come in all shapes, sizes, age and sex and vary in ethnic background, education, and economic status. To combat these losses, retailers will have to take sometimes-extreme measures to control this menace called – shoplifting.

Store Checklist
To succeed in retail you must have energy and flexibility combined with the ability to think on your feet and respond decisively to any issues that may arise. These guidelines will help you to understand your store in detail.

The Knockout Punch
How you interact with the customer is just as important a factor in brand building as any other.

Managing Your Store’s Grapevine
Have you ever walked into a store and felt uneasy? Tense? You look around and get a feeling that no one really works together? Here are some tips to handle such situations.

POP – Enticing Shoppers to Stop… Look… Buy
Point-Of-Purchase Merchandising (POP) lacks the glamour and sex appeal of traditional mass-media communication, such as television and radio. But if we realize that in many product categories, more than two-thirds of the purchase decisions actually are made at the point of purchase, we soon realize the significance of this very important marketing tool.

The art of Merchandise Mix and Inventory Hierarchy

The objective of merchandise hierarchy is achieving the following  

• The Right Product
• The Right Place
• The Right Quantity
• The Right Quality
• The Right Price
• The Right Mix or Assortment
• The Right Time

In order to satisfy every customer’s needs, the retail store must have the right product in right place, in right quantity, with right quality, at the right price, with the right mixes or sizes or variants at the right time. The function of Merchandise Hierarchy is to achieve all these ‘RIGHTS’ so that the sales are high with an ideal level of inventory holding and thus more Profits.  

While planning the merchandise mix, a retail organization has to start with a clear definition of its merchandise hierarchy.

The merchandise hierarchy is a disciplined way of grouping the merchandise mix at different levels, starting from a high-level grouping to the lowest level of the stock-keeping unit (SKU). The grouping may at times have even more than four-five levels such as Color, Size and Design.

The Sale Price (MRP) changes frequently and you have old MRP stock and changed  MRP stock. You need to create a new SKU each time or change the SKU master to new price.

This way you create unnecessary SKUs master and this leads to confusion.

FusionRetail handled this efficiently

• You can use System Generated barcode to identify the correct lot instead of UPC/EAN which is same for all the lots.
• If you wish to use UPC/EAN the system will ask you to select from the list of available lots at POS
• Still you do not want this – you can use FIFO to avoid asking.

An Open-To-Buy (OTB – Merchandize Buying) Plan

Critical to the survival and prosperity of your business is sound merchandise management. It’s not just another “paper exercise” — it can mean the difference between strong, positive cash flow and a constant battle to pay your bills. It can keep your operation profitable even in times of less-than-robust sales.

Merchandise planning, by saving you a lot of expense, can deliver profits to the bottom line. For example, if you’re currently keeping about Rs.30,000 tied up in inventory, and you discover that a carefully-monitored merchandise management (or “open-to-buy”) plan can cut that by 10 percent, you’ve just freed up Rs.3,000 in cash for more prudent investment. Chances are you have at least that much slack in your inventory right now.

Are you ready to bring that inventory into line?

A sample size chart for Garment and FootwearThe essence of Merchandise Planning is to figure out how much of which item from which supplier at what time and at what price to buy? It also accounts for any shortfall or excess caused due to un-predicates sales hike or market crash due to some natural disaster.

The essence of Merchandise Planning is to figure out how much of which item from which supplier at what time and at what price to buy? It also accounts for any shortfall or excess caused due to un-predicates sales hike or market crash due to some natural disaster.

Your Merchandise Plan : To help you implement your merchandise management plan, see the chart mentioned at the top. Though making a plan takes time and effort, it pays off when you begin seeing your merchandise inflow closely matching your sales patterns.

A good merchandise plan improves your inventory turnover, cuts your inventory carrying costs, and helps you keep your inventory fresh — thereby cutting markdowns and closeouts. In short, it will help you make more money!

The goal: NO EXCESS INVENTORY

These days, independent retailers cannot afford one piece of excess inventory. Storage costs, insurance, pilferage, damage, depreciation, taxes and interest on loans add up to 30 percent annually to the cost of the goods you carry. Because those costs continue to rise, tight inventory control is still one of the best investments you can make – especially during the buying season.

How Do You Achieve the Ideal Inventory Control? 

The essence of an inventory control program is planning your stock levels more stringently by using weeks-of-supply inventory maxims. 

Maintain the Balance  
Retailing is a delicate balance between merchandise and cash. Independent retailers usually must take one of two risks: commit themselves to large quantities of inventory and possibly end up with an excess, or commit to less and later find goods unavailable. Given the current economic situation, it’s probably better to go with the second risk.

If you hold inventory in proportion to your projected sales for the weeks of supply, you will have a greater share of fresh merchandise. In addition, timing the inflow of merchandise as closely as possible to the start of the selling season will, in most cases, be more profitable than taking goods far in advance, even if vendors grant dating or other price concessions. The other costs of carrying inventory will almost always wipe out whatever savings you realize by taking goods early. 

Inventory control requires disciplined effort. It takes work to maintain a steady flow of fresh merchandise while keeping stock quantities proportionate to your ideal turnover rate. But if you do shape up your inventory turnover rate, it will improve your income statement, balance sheet and your bottom line. And that’s a program worth doing!