It is trade show time again. It’s time to start placing orders for the next season. It is a time filled with hope and possibility. Buying is the reason you opened your store in the first place, right?
There is one thing that you must do before you go.
In fact, if you don’t do it – you shouldn’t waste your time going to the show.
If you don’t do this, you might as well get a gun and shoot yourself in the foot. Many of you have done this already – and I bet you were wondering why your feet hurt at the end of the day walking the trade show floors. It wasn’t because you were tired! It was because you hadn’t done this…
Go to your computer now and run a vendor analysis report for last year. Run it for the store as a whole and for each department.
Now, grab a pen. Look to see what the average profit margin percentage was for the store and/or department. Look through the percentages for each vendor and draw a line across that average.
Look to see how much you sold by vendor and how much profit each vendor produced for you…or DID NOT produce. Which vendors were above the line, above your average? Which vendors made money for you? Which ones are below the line and under performing? Which vendors owe you some money? Ha. I bet you never looked at it that way before.
Every time I did this in my stores, and every time I have my clients do this there is always a surprise or two. There is a vendor that produced much more profit than you thought. Great – be sure to see if there is an opportunity to buy more this season.
Perhaps there is a vendor that really bombed for you – look into the orders and see what specifically didn’t sell. Can you avoid that type of product in the future? Or is it time to give that vendor up? No matter how much you like them or the sales rep.
Pack this sheet with you and use it in your discussions with vendors. Always approach those conversations with an attitude of partnership. “Your line did not perform well for me last season. It only provided 43% profit and that isn’t enough for me. What can we do about that?” You never know what you will get if you don’t ask.
Run this report and focus on driving more profit this year. If you need any help pulling this report, please send me an email. Some POS systems can be tricky. I have worked with most of them and know how to access this report. This is critical information that every successful retailer must have. Don’t spend any money with a vendor until you know for sure how profitable they are for you.