The Art of Being a Good Buyer

by Peggy H Taylor

The decisions of the person who purchases merchandise for your store can make or break your business. Successful buyers ought to stay on top of the changing market place by reading trade journals, staying tuned in to online retail events, by going to trade shows, and by maintaining a good relationship with their reps. 

To be effective, buyers must be knowledgable on all aspects of the business they are buying for so they can ensure they have the right stock at the right price at the right time. To accurately achieve this goal you must know about inventory management, sales planning, forecasting, and open to buy planning.

Buyers must consider style, price, quality, and availability when ordering merchandise; in addition, reliability and support from suppliers is also a key factor. Feeling confident about the reliability of your supplier is critical for buyers since the well being of your store is in both your hands and theirs. Delayed deliver of inventory could result in a loss of business and customers.

Good buyers have the uncanny ability to assess which styles and merchandise will sell in their store by anticipating what their customer’s appetite will be the following retail season. Failure to be a good picker could result in a loss of profits and customers for the company. To work through this process successfully, the buyer needs to study past sales, inventory levels, and the historical sales performance of product manufacturers. 

In most small independent retail stores, the owners are also the buyers. More often than not, they do a good job of selecting the goods to sell in their stores. Buyers who fail to be successful at picking good merchandise for their store should be replaced or at lest assisted by someone who is good at selecting merchandise, even if it is the owner who has to step aside for the good of their store.

How do you rate yourself as a buyer?

Make sure your perspective is perceptive

By Harvey Mackay
   
We've reached a point in our country's history where authority and power seem to be manifested by the need to shout down the other person.  Discussion and compromise are words freely bandied about, but they've largely lost their meaning. 

What is really lost is perspective.

Just as there are two (or more) sides to every story, there are plenty of different ideas on how to get things done.  No one person has a corner on that market. 

A lot depends on who is doing the looking. Consider the story of three people of different occupations as they looked at the Grand Canyon:

The priest said, "What a glory of God!"

The geologist said, "What a wonder of science!"

The cowboy said, "What an awful place to lose a horse!"

How we approach an issue often colors our thinking about the result we wish to achieve.  What we want may not line up with the next person's desired outcome.  Our motives are not wrong, just very different.  We need to respect each other's views and consider that our own may not be the only one with real merit.

Sure, that's easier said than done.  But it can be done!  And some of the most creative and powerful people in the world have offered very helpful suggestions for expanding our perspective so that we can truly work together.

For example, Thomas Watson, Jr., the late chairman of IBM, shared some wisdom from his father, Thomas Watson, Sr., founder of the company:  "Father was fond of saying that everybody, from time to time, should take a step back and watch himself go by."

If you did that, would you like what you saw?  Be honest! 

Will Rogers, a uniquely American humorist known for his homespun wisdom and keen wit, summed up perspective this way:  "You must never disagree with a man while you are facing him.  Go around behind him and look the same way he is looking and you will see that things look different from what they do when you're facing him.  Look over his shoulder and get his viewpoint, then go back and face him and you will have a different idea."

Note that both of these examples are from an era gone by, when folks seemed to be kinder and less contentious.  We haven't necessarily improved our society since then -- in fact, I would contend that we've gotten meaner.  How does that seem to be working?

Perspective is critical in competitive situations.  If you can't see solutions from a competitor's point of view, you can't compete.  How will you know what they are doing better than, different from, or instead of you?  Who are they appealing to with their approach?  How are their customers responding? 

I love to ask customers what their ideal product would be.  What would their ideal supplier do differently?  More than once I have been stunned at the simplicity of the solutions.  Those questions open up a new line of communication and trust which benefit both sides.  Don't just file away that information -- use your new perspective to prepare for your next customer and competitor.

Whatever you do, don't fall into the trap of dismissing issues with statements like "it's all just a matter of perspective."  That is too often another way of saying that the other person's perspective is not as important as yours.

Have you heard about the aging race horse that tried and tried but just couldn't run fast enough to win any races, or even finish in the money?  His impatient owner told the jockey, "Either that horse wins some money in today's race or his next assignment is going to be pulling a milk wagon."

The jockey loved the horse and did everything he could to spur the horse on.  He muttered sweet words to him as they went around the first turn.  And on the backstretch, he shouted loud words of encouragement.  But as the horse faltered in the stretch, the jockey started laying on the whip with terrible force. 

At this, the horse turned his head to the jockey and said, "Hey, man, take it easy on that whip.  I've got to get up and go to work in the morning."
   
Mackay's Moral:  The difference between a horse's front end and back end is a matter of perspective.

The 10 Most Innovative Companies In Retail

BY FastCompany Staff

01 / Groupon >>
For integrating web and the real-world shopping experience, changing consumer behavior, democratizing small businesses, and spawning an entire new category. The fastest-growing company in web history, Groupon's flash deal site marries cents-off coupons to a Friday-after-Thanksgiving shopping frenzy. The company broke into the black just seven months after inception; globally, more than 500 copycat sites have already sprung up.
02 / Trader Joe's >>
For becoming bigger than Whole Foods while retaining its down-home image. The grocery chain's limited-selection, high-turnover model allows it to buy large quantities, secure deep discounts, and stock its shelves with a winning combination of yuppie-friendly staples (cage-free eggs, organic blue agave sweetener) and affordable luxuries. Its 344 U.S. stores sell an estimated $1,750 in merchandise per square foot, more than double Whole Foods' tally.
03 / Marks & Spencer >>
For its aggressive pursuit of sustainability. In the past year, the U.K. company has pioneered charging for plastic bags, significantly reduced packaging, and launched a clothing recycling venture with Oxfam. It has also committed to becoming the first major retailer to ensure that six of the key raw materials it uses--soya, cocoa, beef, leather, coffee, and palm oil--will come from sustainable sources that do not contribute to deforestation.
04 / Amazon >>
For leading the way into the digital book market with the Kindle--and setting off a major shift in the public's reading habits. And alhough competition is fierce in the e-reader universe, Amazon is still the dominant player in online commerce.
05 / eBay >>
For leading the charge on mobile commerce. This year alone, eBay expects to sell $4 billion in goods via smartphones and tablets, more than double its figures from 2010 and well above those from any other retailer. Its core iPhone app has been downloaded some 15 million times, and the company is releasing a series of interest-based mobile apps focusing on fashion, motors, electronics, and home and garden.
06 / Apple >>
For creating platforms and products that breed entirely new businesses, including the App Store, the new iTunes 10, the Apple TV digital storefront, and the iPad, a screen that's better suited than the iPhone to leverage online buying.
07 / Starbucks
For listening to its customers--really. Although the feedback site MyStarbucksIdea.com was originally panned, almost 98,000 ideas have been submitted, and 100 have been adopted. Among them: donating unsold pastries to local homeless shelters and food kitchens, giving baristas name badges, selling reusable sleeves, and bringing back Salted Caramel Hot Chocolate.
08 / Shopkick
For bridging the in-store and mobile retail experience. Beyond rewarding users with perks as soon as they enter a store, Shopkick's location-aware smartphone app also guides users through physical retailers, letting them see reviews and multimedia content. Best Buy, Macy's, and American Eagle have already signed on as partners.
09 / Ikea
For attacking waste by selling its used furniture online in Sweden, and making its venture capital unit's first investments. Ikea Greentech is dedicated to supporting ventures in alternative energy solutions and lighting that might lead to the development of products for Ikea. The company has also bought German and French wind farms to cut its carbon footprint.
10 / Urban Outfitters
For nurturing very distinct, successful, and quirky retail brands, including the youth-oriented Urban Outfitters, the romantic and sophisticated Anthropologie, and the high-end, bohemian Leifsdottir.

Small Business Lemonade Stand

By ELMIRA BAYRASLI

It couldn’t be the 4th of July without the neighborhood lemonade stand – that all-American symbol of entrepreneurship. So many American start-up tales involve lessons learned from this childhood exercise. The one Suzie runs in this Verizon commercial offers many.



Here are a few that other entrepreneurs might consider:

* Suzie hires for the future. While she may go to a greying boardroom to raise capital, she recruits those with little experience but tremendous potential (and knowledge of the market) to help her implement her idea. Execution isn’t a concept. Make sure you have people that can deliver.

* Suzie hires an adult as an assistant. She recognizes that experience doesn’t just come at the top. There is benefit to having those with stories and scars to help at the ground-level. Grey does, after all, start at the roots.

* Suzie doesn’t let go of her interests. “A slide or monkey bars,” will do just fine for this young lady as she talks to an architect helping her design her lemonade empire. She may have swapped pigtails for tailored suits, but won’t give up the things that make her happy – or allow her to have fun.

At the end of the day, fun is what entrepreneurship should be. Happy 4th of July.

by James Hallman.

…let's talk about bananas.  Bananas are an interesting fruit- they come in their own zip-lock covers, and they are good for you. I personally love to eat bananas. So do a lot of other people.  So, to better understand what inventory turn means, and also to help answer the question of "How do you do it?" let's go into the banana business together... 
 
Let's say we own a little fruit stand, and from this fruit stand we sell bananas. We buy our banana stock from a local wholesale market. We pay 50 cents for each banana, and we sell it to our customers for $1.00.  We sell, on average, 100 bananas per week (remember, it's a small fruit stand).  So, bright and early, each Monday morning, before our stand opens, we go to the wholesale market, show our ID cards to prove we are real-life retailers and have a right to buy at this wholesale market, and we buy our 100 bananas. 
 
We pay $50 for these 100 bananas. Our inventory investment in these 100 bananas is $50.  We work hard for six days, and by Saturday night, we have sold all of our bananas. We made a $50 profit on our $50 investment.  We turned (bought and sold) our inventory of bananas one time that week. We take Sunday off- we deserve the rest! 
 
Now, we begin to exchange notes about our business - how can we do more business? "Well," you say, "almost every customer who comes by the stand to buy bananas asks me if we carry apples. I think we could sell some apples, if we had them."  I agree, since many of my customers also asked about apples. 
 
We decide to do some high-tech market research.  All the following week, whenever anyone asked us about apples, we put a hash mark on a sheet of paper. By doing this, we determined we could sell at least 50 apples per week. We can get the apples for 50 cents each, and sell them for $1.00, just like the bananas. 
 
We only have one problem. We don't have an extra $25 to buy the 50 apples!  We only have $50, and we need that $50 to pay for our 100 bananas. All the meager profit we make each week goes to pay the rent on the fruit stand, and for us to live on.  We think about borrowing the extra $25 from your Mom, but you don't want to ask her - and she doesn't like me at all!  Oh, what can we do? 
 
"Eureka!", you exclaim. "I know what we can do! This Monday morning, we'll go to the market as usual, but instead of buying 100 bananas, we'll only buy 50 bananas. With the $25 we save, we'll buy our week's supply of apples!" 
 
"But if we only buy 50 bananas, we'll run out of bananas", I note.  "Not really", you say, "because we'll make an extra trip to the market Thursday morning, and with the money we made from selling all 50 bananas and half the apples the first half of the week, we'll buy the other 50 bananas we'll need for the second half of the week".  So, that's what we do, and of course, here is what happened: 
 
Rather than investing $50 once per week to sell the 100 bananas which brings us a $50 profit, we invest only $25 to buy 50 bananas, we sell those for a $25 profit, get our original $25 back, and then re-invest it in another 50 bananas which we sell the other half of the week. 
 
Now, we are making the same $50 banana profit on a $25 investment because we buy 1/2 the bananas twice as often during the week.
 
With the other $25, we buy our week's supply of apples. By selling the apples, we make another $25 profit. 
 
So now, our same $50 invested in fruit is returning us a profit each week of $75, rather than $50. 
 
That is what inventory turn is all about: buying, selling, and rebuying the inventory more often during the same time frame. 
 
And, it won't take us long to realize that we don't really need to buy our entire week's supply of apples all at one time, either. 
 
After all, some customers have been asking about oranges... 
 
Note: To improve your fruit stand's inventory turn, it is vital, even critical, that you know how many bananas you can sell per week.  And apples, and maybe even oranges. That is where sales forecasting and inventory planning comes in...
 

3 Proven Ways to increase Sales Without Going Broke

Even if we continue to see modest gains in retail sales, many businesses are still struggling to grow sales with limited, or even nonexistent budgets. If you are looking for ways to increase sales without spending much, try these ideas:

Maximize upsell opportunities
Upselling is a highly profitable tactic for increasing sales and profitability per customer. It involves inducing a customer to purchase additional or more expensive products and services than they had originally intended. The incremental cost of achieving the additional sales is negligible. The customer was already intent on making a purchase.

As consumers we are continually exposed to upselling. When you order a hamburger and are asked if you want the “meal deal” – which adds french fries and a soft drink – that is an upsell. Being asked to upgrade to run flat tires when you purchase a sports car is also an upsell.



Upselling can be applied to virtually any type of customer and industry. It can also be used effectively across multiple sales channels: your website, call center, retail space and more.

Execution is important. Using deception or acting desperately are poor ways to conduct upselling. It’s critical to ensure that your employees understand this and that your incentive scheme does not inadvertently promote bad behavior. Adding a quick survey at the end of a customer’s buying process to assess how the sales person treated them may counteract the desire to upsell too aggressively.

Facilitate impulse purchases
An impulse purchase is an unplanned decision to buy a product or service which is usually made right before a planned purchase is consummated. These are emotional, not rational, purchases. Recent studies estimate that about 20 percent of purchases are unplanned. A recent study by Miller Zell, a leading retail strategist, indicates that 51 percent of buyers make unplanned or impulse purchase decisions.

Some proven tactics for increasing impulse purchases include:

•Using in-store signage that attracts attention and is positioned at or close to the point of sale
•Making the process as simple as possible, ensuring that the buyer won’t be delayed by making the impulse purchase
•For online and call center sales channels, including impulse purchases as part of the standard check-out order flow and script.
To determine the success of your impulse purchase campaign, establish benchmarks for sales based on recent performance by category, location, channel and employee. Consider implementing a management dashboard to assist with the process.

Optimize your selling environment
Paco Underhill, president of Envirosell, a behavioral research and consultancy firm focused on commercial environments, is also the author of “Why We Buy: The Science of Shopping” which discusses his research and methods for enhancing retail sales. One area covered in the book is organization of inventory. There are many tactics that can be used to make it easier for your customers to access higher-priced and higher-margin products. Steps like placing preferred items on shelves at eye-level, adjusting lighting and optimizing the floor plan can generate material increases in the sale of high-margin products.

Will all of these tactics work as planned? No. Nothing ever does! But it is definitely worth trying them out.

Mike Periu is the founder of EcoFin Media, LLC an independent producer of financial, economic and entrepreneurial content for television, radio, print and the Internet. Over the past ten years he has started three companies and advised over 50 companies on financial strategies including fundraising. Mike also hosts regular small business webinars on a range of topics relevant to business owners.

Spring Forward to Success

by Peggy Horne Taylor

I know you are probably grateful to have survived the long slow months of the first quarter of the year, but to what degree have you survived? Do you have money in the bank or are you wondering where your next dime will come from? If you ask around, people will tell you things are picking up and sales are improving. Will this improvement mean you will be getting ahead or will it simply allow you to keep from going under? As a retail business owner, what can you do to sleep better at night and not worry about every little hick-up in the economy?

Open-to-buy planning allows you the ability to look ahead into the future and see what your sales will be and what your merchandise needs will be throughout the year. Okay, I can hear you saying this now, “Sure you can, there is no way you can predict what is going to happen, especially in this economy. I don’t need to know this nonsense, I need more customers walking through my door.” By now you must be wondering what secret wizardry is used to produce this impossible feat.

You will be surprised to find out it really is not secret wizardry, and you might also be shocked to find out you just might not need all those extra customers to walk through the door either. Now don’t get me wrong, extra customers are good and they will help you increase your sales, but you can still put more money in the bank without them, and this is how it works. First of all, without even going in your store I am assuming you probably have too much inventory because more retailers do, and sadly, they don’t realize it. Idle inventory sitting on your shelves could be money in the bank, but instead it will become excessive markdowns which result in less profit for your business. There is an optimum amount of inventory you need to be a fine tuned retail machine; too much inventory results in less profit due to excessive markdowns late in the season and too little inventory results in lost sales. So, if you know the ideal amount of inventory you will be a much more profitable business.

Open to buy planning as I said earlier gives you the ability to read tomorrows newspaper today, so to say. Information is collected from your sales history and your POS system or your manual inventory. Your information is then crunched by retail analysts who compile and translate the numbers, and get them back to you as set of plans you can understand. These plans show you where you are under or over stocked based on your sales history. The plans tell you how many dollars you should spend in each department in your store. If the plans show you are overstocked in certain classes, your analyst will recommend you have a big sale to liquidate excess stock. Keeping a handle on your inventory is essential if you deal in clothing because after a few months it is almost impossible to sell no matter how much you reduce the price. The plans will also forecast what your sales should be if you stick to the recommendations the plans provide for purchasing and marking down items, and they are a great source of buying knowledge when you go to market.

All of this being said, open to buy planning is only as good as the seriousness of retailers who want to take their business to the next level. If you succumb to temptation and buy too much, you will continue to tread in the murkie waters of retail gloom. You can sweep the idea that you might need to make some changes under the carpet, or you can take charge of the situation and work to make your business more profitable now.