Why buying is just as important as selling

sale on.jpgThe new football season kicks-off this weekend, a boon period for sports retailers as supporters scramble to get kitted out in their club’s latest replica strip. Today you could barely get through the doors of Lillywhites in Piccadilly Circus (so much for the credit crunch) for the hoards of Manchester United and Liverpool (don’t get me started) kit-clutching shoppers.The relative haven of the clearance corner, where last season’s strips are being knocked out for a fiver just 12 weeks since they commanded £35+ pricetags, tells you everything about the pace of retail change and the mark-up to be had on items of questionable quality and ethics.That’s a different a story, though. I was more taken by the breakdown of the sale stock. Someone in Lillywhites’ buying department must have seriously overestimated the number of Birmingham City fans in London. Or, as I can safely vouch being one of what is a rare breed, the whole world. Around 80% of the sale stock were Birmingham shirts. I've seen fewer at away games.While I can understand perfectly, having watched yet another season of dour relegation football, why the shirts hadn’t sold, I'm confused why so many were overed ordered. Did someone mistakenly slip a zero on end of the order? Two zeros?!Product buying is a problem that blights many early retailers, yet it’s rarely spoken about as an essential skill for running a business. You hear plenty of advice about making sure your business has USPs, a target customer, markets itself correctly, drives sales etc, but rarely is the focus on buying, let alone margin.Negative cashflow kills more new businesses than anything else. In retail it’s almost always caused by overstocking.I was chatting about the problem recently to John Spooner, former MD of Monsoon and manager at Liberty. He's seen it all before. Start-ups commit all their money to three months of stock then can’t afford to replace what sells and end up trying to flog-off cheap the stuff that doesn’t.The key, he says, is always keep money in reserve and try to have as many suppliers as possible who’ll do repeat orders instead of just bulk. Ideally, you shouldn't commit more than 50% of sales forward.Spooner also says new businesses should keep product ranges simple. Don’t get carried away at trade sales and don’t feel obliged to offer a lot choice. Start with core products you know will sell then slowly test and introduce new lines.Lillywhites, owned by giant Sports Direct? Now they should just know better!Image: Flickr
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