Accurate calculation. Calculate how much you need to buy for a shoe store.
18.11.2015 39359

Accurate calculation. Calculate how much you need to buy for a shoe store.

Overstocking is faced by both large chain stores and small ones. Simple forms of calculation will help determine how many products for each product category you should purchase. SR understands the intricacies of procurement Galina Kravchenko, a leading expert on the assortment and forecasting trends of Fashion Consulting Group.

The stages of procurement budget formation can be divided into three stages:

1. Sales forecast, determination of assortment performance indicators and calculation of inventory for the season. Important:

  • where is the calculation of total indicators;

  • detailing on assortment groups and adjustment for residuals is carried out at the stages 2 and 3 and involves painstaking calculations for assortment groups.

2. Detailing inventory and forecasting balances on the assortment matrix.

3. Calculation of a detailed assortment matrix and inventory for procurement, calculation of the desired procurement budget.

The above algorithm is a scheme for calculating key steps; it can be expanded and complicated depending on the specifics of the business.

Step 1

Sales forecast, determination of assortment performance indicators and calculation of inventory for the season.

This stage allows you to look at your business “from above” and, ultimately, understand whether it is worth working with a given outlet, whether it is necessary to plan purchases for it, whether it is profitable or not.

To calculate the amount of inventory for the purchase, you must first know:

  • sales plan for the season (planned revenue in rubles);

  • trade margins at the beginning of the season - mark up (total);

  • discounts from the original retail price;

  • the balance at the end of the season.

This is incoming information for calculating inventory, on the basis of which the actual mark-up taking into account discounts (mark on) is calculated, as well as an indicator of gross profit.

Only by following the above algorithm, you can accurately calculate the gross profit (the amount to cover all store costs: purchase of a collection, rent of retail space, staff salaries, advertising costs, etc.), and if the amount received is sufficient (after deducting expenses, it remains acceptable for you "Plus"), the store can continue to operate, it is cost-effective. If the gross profit is not enough to cover the costs, then in today's realities several scenarios are considered:

  • shop closure;

  • reduction of expenses for the store (reduction of staff, optimization of the area, reduction of rent, reduction of the area of ​​the store to reduce the totality of costs, etc.);

  • subsidizing the store at the expense of more successful outlets in the network. For example, FLAG SHIP stores (a reference store, or an image store of the chain with a special design of the sales area and presentation of the assortment) may not cover the direct costs of its maintenance, but be a marketing / PR tool for attracting a new target audience and pay off due to the entire brand network ...

 

The most common mistake is to conduct planning not for each outlet, but for the entire network. In this case, we do not get an objective picture, but only measure the "average temperature in the hospital." Meanwhile, each business object implies individual conditions for successful sales: climatic features, taste preferences of the regions, different “traffic”, location, store area, consumer structure, price segmentation and other factors that must be taken into account.

Step 2.

Detailing inventory and forecasting balances on the assortment matrix.

Only after calculating the key KPIs and the total inventory for the outlet, its detailing follows - categorizing and assortment groups. If necessary, the detailing can be very detailed, right down to the color scheme and the dimensional grid (when it comes to a clothing / footwear store). For example, how many casual or business models, how many basic and trendy ones should be sold during the coming season? At this stage, future purchases are planned as a percentage or fraction.

It is important to correctly indicate the structure of the assortment. It is important to consider not only indicators of the sales structure, but also the structure of profitability of assortment groups. It is dangerous to take the 100% indicator of the inventory structure in the fashion industry solely on the basis of statistics. It is also imperative to include expertise and weigh additional quality criteria. You can take the gross profit structure by assortment classifier as the basis and then compare it with the s / s purchasing structure and pass quantitative indicators through the filter of qualitative sales factors: successful purchase of models, competitive assortment offer from the store, changing trends in consumer behavior, and others.

Then, after the formation of the correct structure of the inventory, the calculation (allocation) of the amount of planned inventory according to the structure of the assortment takes place. The calculated inventory for the assortment group must be divided by the projected cost (s / s).

The next step, after understanding how many pieces of inventory are needed for each group and category of assortment, are forecasting the remainders at the end of the season.

To plan the assortment for the next season, you will need to calculate how many balances are carried over from the previous season. In practice, there are stores that do not take into account the remnants of previous seasons, but consider each purchase individually.

The most common mistake in manual calculations is not to take into account residuals when forming the assortment for the season, or to take into account their total amount over the entire assortment without detail. This approach leads to the fact that it is impossible to determine exactly which assortment positions are available and which need to be strengthened in the procurement, they simply are not visible. As a result, the assortment present in the warehouse is supplemented with a new one, forming even greater balances at the end of the season, while the assortment that is really needed to fulfill the sales plan is not represented enough. Inappropriate use of the budget, clutter of warehouses, and also insufficient indicators of profitability of the company as a whole are obvious.

 

Step 3.

Calculation of a detailed assortment matrix and inventory for procurement, calculation of the desired procurement budget.

At this stage, stores will be able to plan the number of pieces of goods for purchase and turn them into a purchase budget.

The calculation is very simple: inventory (TOR) in the purchase (pcs.) = TOR plan for the season - balances. Such a calculation is made for each assortment group in pieces, since the cost price (s / s) of balances and newly purchased products may differ. Further, the received quantity (pieces) in each category is multiplied by s / s and the purchase budget for each assortment group is obtained. And only then, summing up all the assortment components, the purchase budget is formed. By the way, the given form for the calculation is quite suitable for trade and production companies. In this case, a detailed plan for the production of the necessary goods for the season is drawn up and the number of models is additionally calculated.

The structure of TK is individual for each company and is based on unique sales statistics. If a company identifies lines or groups of risk in its assortment, buys more than one brand or has a complex supply system, the calculation is expanded to take into account all the needs of assortment management. Then the structure of TK is considered as a separate matrix. When calculating the size ranges, the TK size in the purchase is presented in the form of the number of models that need to be purchased. 

Overstocking is faced by both large chain stores and small ones. Simple forms of calculation will help determine how many products for each product category you should purchase. AT…
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