How to Grow in Q2
April first was the 92nd day of the year (this is a leap year after all). It was also April Fools Day, however, there is no fooling around when it comes to what can be accomplished in the next 90 days.
We begin the exercise by looking back and evaluating what went well and what we could do better. It is also a good time to check in those first quarter goals and measure your progress.
I like looking at 90 day increments to set expectations and keep track. It is a reasonable enough time to analyze decisions and their results. Or what caused what effect? The answer might surprise you!
Right now is an especially opportune moment to look at where you are, and establish where you want to end in terms of a cash and inventory position on July 31st. The ultimate success you will achieve for the fall and holiday season are dependent on where you sit on August 1st. For instance, are you selling new fall products or still liquidating spring and summer?
For example, some worthy goals are to increase your cash margin % as of July 31st over the same time last year, and to attain inventory freshness as close to 100% as possible. One way to help keep score and monitor your sales and cash flow is the 12 week cash flow tool. Analyzing this weekly allows you to manage decisions with information collected that were impacted by changes in demand, markdowns, and overall inflow of product. This tool keeps score of projected and cumulative sales receivings, on order, (future payables) expenses, and adjusting for expected outcomes.
As cash margin can be tracked with the 12 week cash flow tool, inventory freshness has its one methodology. A guide to inventory freshness is by comparing your actual receiving’s over the last 30, 60 or 90 days and divide that into your current inventory.
Here is the math…
Current inventory at Retail $300,000
Retail receipts (Inflow)l last 30 days is $100,000 Freshness is 100,000/300,000 or 33.3%
Total retail receipts last 60 days is $ 250,000 Freshness is 250,000/300,000 or 83.3%
Total retail receipts last 90 days is $350,000 Freshness is 350,000/ 300,000 or 116%
Freshness depends on the timing of the deliveries in specific verticals. For Fast Fashion 30 day freshness should be at or above 100%, for luxury or some seasonal classes the freshness is going to be dependent on the amount of pre season front loading required. Footwear and gifts should look to be at close to 100% for 60 days. The freshness factor is part of the M1 merchandise plan and plan in demand.
Hitting these metrics is easier using M1 merchandise planning as those tools provide the lions share of the work and eliminates the guesswork. This enables an indie retailer to continue to make the necessary risk but mitigates them with on demand reporting.
One quarter down and three to go. Reviewing your Q1 results and projecting the next 90 days is a very worthy exercise.
M1 retail experts provide both the tools and accountability to ensure your success and assure the confidence in achieving your goals.
Onwards and Upwards,
Marc
