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Progress invoice example for Retail Trade

[Music] what I'm going to talk through now is just one strategy and it takes that whole concept that I've just been talking about just a little step further so this in itself is literally a grading strategy that you could apply it's something that I that I've implemented previously and don't pay too much attention to the numbers fees it's just an example but when you think about store braiding and by grading I mean you know how you cluster your stores you know your your biggest turnover stores or your like stores based on certain demographics and there is an opportunity for you to make me rethink that a little bit and so I'll step you through that here where you could say but you're ABCD and E stores maybe your eStore was already a couple of outlet stores I've just popped in some store counts there as administration you could actually create two channels in your existing bricks-and-mortar network and a primary channel and an alternate Channel and then actually regrade your stores into those so perhaps but you're a B and C stores into your primary channel and your D and E stores into your alternate channel so what would be the point of this what it bad allow you to do is to continue to exert your excess stock through a dedicated channel so those less high-profile stores those stores that have always leaned a little bit more towards markdown activity and it need to crunch your numbers and really analyze your stores to to get this profiling right but you could create an alternate bricks-and-mortar channel where you can continue to pump through your excess stock I guess it might be on markdown what might have a lot of promotion attached attached to it but at least it can keep moving and everything has its price so yes it might be out of season but there could be people who would buy for next season or I was going to say for travel but I don't know the repo travel for a while on the radar another reason for this is to reduce your risk if you are only actually buying your new product for your best stores you're a B and C stores for a short period of time this as a temporary strategy you reduce your risk because you're not needing to invest as much product as you ordinarily would and you're only sending that product to the place where it has the best chance of success in doing that you're also conserving cash so instead of having to spread your buy across your entire store network you're actually concentrating your Buy and where you need to invest new product into a smaller number of stores what this also allows you to do is back your brand so those a B and C stores can stay on brand can keep moving forward with newness while your DN e stores are handling exs and what that allows you to do is actually manage your message so you can and you would have tons of information to help support this you can target your messaging to your customers ing to demographics ing to how they're shopped before so that the customers that are going to be likely to go after your new product get one message and the customers that are your discount shoppers will go with the other message so you can actually speak to them quite individually and I guess have a little bit of the best of both worlds through the strategy I have worked with a lot of businesses in my time and probably close on 100 between my working in my own business and through my career and without fail businesses tend to run to run a little bit overstocked they tend to over a sort when they put a range together and so I really do think that there is something here that can help you just take the edge off a little bit and make it hash go a little bit further I'm going to just switch across very briefly now to excel and walk you through a little example I hope that you can see my screen and if you can't bread please give me a little warning but this is just to try and illustrate a little scenario building on that example that I just stepped you through your home in the presentation what I've got across the top here is and those same store grades ABCDE and in those two tenant those two channels that I've set up on the side clustering your ABCs and your DES and what I got down the bottom here is just some inputs so for the purposes of this example I've just said let's our retail price is $89 let's say we work at a margin of 60% are buying margin so that gives us our cost price that we're going to work with in this calculation so looking at this first little section here I've just assumed a store count per grade so what this pretty much means is that you look 15 stores in your a grade grouping and 45 B's of your B grade grouping 25 in Missy stores and so on so this totals up to a hundred store network and I've also just for simplicity assigned an average store turnover to each of the grades just to help me build up the numbers quickly and so you can see that your smaller stores or less high-profile stores would have fun lower turnovers and so this is an example of a seventy-five million dollar to know the business and I imagine there are all shapes and sizes of businesses dialed into this call and so don't get too hung up on the numbers this is really just about illustrating this concept oh and by the way and I do believe that AFC is going to make this spreadsheet available for you have a little play if you want to and so that option will be offered later on in the call or through follow-up materials and so pretty much what we've got here is we've got our store grades then and we've got our turnover that goes with them and we can see approximately Lin how our sales are distributed across those grades so if we go on to our next step this row here is just assigning how many units we might buy per store in that grade so this is same 18 here an aggregate store would potentially get 18 units of something new that we bind we behind them a scarf we're by 18 probably makes more sense across something that actually helps sales curve to us because then you would be buying your full-size could've possibly try us over for those stores and then bulking up your most popular sizes and then as we move down through the stores and through the different store raids we would be buying less typically for those smaller stores or less fast turning stores so pretty much what we get to then is if we multiply our store count by the number of units per store then we can tell how many units we'd be buying in total and multiplying that through by our cost price we can get to what would be the cost of buying a new option into your air grade stores one option in one month and then taking that one step further we can say well if we know that that would be our cost across each of our store grades to buy in a new option each month then by multiplying that art with how many new options we might drop in we can see what that's going to cost so if we look across here we could say to drop in 12 new options across all of those stores would cost five hundred and eighty thousand dollars and if we split that into our two channels we can see how that ratio suits if we said we were going to run the strategy for three months we would just be multiplying these numbers out by three and if I take you across here by not company new stock into that DME channel like I was talking about before in that little illustration you actually stand to save two hundred thousand dollars in the six on corporate investment because you would be pumping your aged stock or your excess inventory through that channel instead so your first step is a saving their potentially two hundred thousand dollars simply by focusing your investment to the stores where you are likely to get your best results you know there's the expression give your best your best this is an example if you if you tailored your by two specifically those top stores and giving keeping your brand integrity and switched on you could save that stock investment we can take it a little bit further and and say well what if we changed the options per store instead of and giving every store those new twelve options what if we gave them less and less and less so in other words we sharpen up that assortment wage well again you can see that there would be savings they've come out of that scenario we can play with these numbers we can say what if we had a 50% margin you can see that you're saving would be potentially higher we can say well what if I actually introduced 15 new options each month well then you potentially stand to save more you could say what if I only ran the strategy for two months then your numbers will adjust down so like I say it's just - it's just you put a dollar around around this initiative I'm not saying you must do this I'm saying it's an option in in a time we don't have a lot of options and this is just an example that illustrates the benefit that you might get from reassessing your grading but the same principle would apply across your fringe sizes fringe colors fringe products just making those choices and priorities within your range making sure you tie that back really tightly to your strategy and why is that product being offered and how does it support your brand making those calls and being a little bit um erring on the side of caution earring on the side of discipline there is money that you can save by making some small tweaks so I hope that wasn't too many numbers and didn't hit your brains and I hope it's helpful like I say you should be able to get access to that spreadsheet to just model some things and play around for yourselves if you'd like