How to full proof your career & prepare for future jobs?

My inspiration to write this article comes from wonderful response and feedback that my earlier article received which I had written on developing “Resilience” and how to decode “No” in your mind.

I would give credit to below line which would kick-start my article and would set the tone for my article.

“The Illiterate of 21^st century will not be those who cannot read & write but those who cannot learn, unlearn and relearn” – Alvin Toffler.

My article is my attempt to provide few tips and guidelines as to how one needs to adapt to new challenges that technology would be posing to us especially in the Retail & service sectors.

With the advent of cashless economy and stores without any sales personnel, i.e. stores like “Amazon Go” which uses hi-tech Artificial Intelligence couple with facial recognition and cashless transaction which indirectly means following job profiles would be redundant in future definitely with advent of machine learning systems: Customer service personnel, Cashier & Merchandisers or promoters.

Above is just one example from the front end of the store, at the backend, various functions like merchandising planning & buying could also vanish since the computers/systems powered by AI would replenish the stocks by generating system LPO to the vendor which gets delivered to stores directly by the vendor.

Personally speaking, the overall future of Retail using AI-powered machine learning systems sounds scary but as there is a saying that when going gets tough it’s the tough who gets going.

The future belongs to those who are ready to LEARN, UNLEARN AND RELEARN. 

My article is my sincere attempt to some useful insights

A)  Hone your skills: Every Job function has technical skills and soft-skills requisite.

My advice would be to develop and polish your SOFT SKILLs which machine learning AI systems would never be able to adapt easily.

What are soft skills?

As per Wikipedia, Soft skills are a combination of people skills, social skills, communication skills, character traits, attitudes, career attributes, social intelligence and emotional intelligence quotients among others.

Always remember People love to do business with People and this premise would always remain relevant in future business as well.

B)   Adapt yourself to changing work/ job requirements:

It’s not just the jobs in demand that are set to change, but also the way we work. As mentioned, organizations are facing skills gaps and employers are increasingly turning to temporary and contract employees in a bid to bridge these gaps.

Not only will you gain experience in this increasingly popular format of working, but you’ll help safeguard your future employability by broadening your range of skills and experience in a relatively short period of time.

C)  Adopt a growth mindset and remain curious to learn new things/skills, even if it does not relate to your professional education or experience.

Mark Twain once quipped “I have never allowed schooling to come in way of my education” and I feel this line said by him is so relevant in coming times.

D)  Cultivate Curiosity: Being curious make life more astonishing and would make you happy & more creative. It’s the creativity that would full proof your career as machine learning systems cannot cope with human superpower i.e. Brain.

E)   Listen to your team & family and assume that anyone who disagrees with your opinion is partially right.

Listening to his kids helped industrialist Mukesh Ambani (chairman Reliance Industries Ltd) to launch “JIO” telecom service provider in India and captured over 10 million subscribers in less than 20 days. 

They understood that future belongs not to “Voice” but to “Data” hence they launched 4G LTE technology wherein their competition were still trying to recover costs of their investments in 2G and 3G networks.

To sum up my article, I would like to emphasize on the fact that change is happening faster than ever before, it took 75 years to get 50 million telephone subscribers or users, It took a popular game “Angry Birds” to reach 50 million downloads in less than 40 days.

Most importantly, find your key strength “your MOJO or WHY” and work on it. Become the expert in your field by constant learning.

I would be more than happy to guide my readers and my connections on Linkedin who would need my cutting-edge advice & solutions for driving growth to their businesses. I can be reached at riteshmohan@yahoo.com

About the author:

Ritesh Mohan is a passionate retail professional with over 20 years in the retail sector, handling some of the biggest brands in beauty, fashion and fragrances retail & FMCG sector. He has been instrumental in the growth of some of the regional brands as well in Middle East region. He specializes in Retail management, Product development, Brand management, Retail Operations, Sales Management, Business Management & Empowering business owners with his wisdom & experience of around two decades in the industry.

How to use Inventory planning tool “Open to buy” & use it strategically?

To write this article, I was inspired by the response that my previous article got i.e. on Markdowns in retail, which got read by over 10,000 retail professionals worldwide right from Australia to the UK and of course middle eastern countries.

In continuation of my earlier blog on Markdowns topic, I would like to highlight another important inventory planning tool i.e. OTB or Open to Buy.

I get so disappointed to read Retail industry news wherein we read that classic brands across the world are either closing their stores or filing for bankruptcy & recent example is of Toys R Us. Many retailers had to close their doors because they did not manage their inventory well. One of the biggest contributing factors to mismanagement is a lack of an open-to-buy system with key retailers.

Even the Middle Eastern region is not insulated from this Retail apocalypse, in fact, gone are the days wherein local traders turned retailers used to import container loads of goods and sell at full margin. Cut short to 2018, to sell even 25% of inventory at full price is a dream come true for many retailers amidst tough competition across categories say its fashion, beauty, toys, electronics etc.

What is OTB?

An Open-To-Buy is a budget and involves the full range of budgetary functions. It begins with the planning process, is future oriented, provides guidance on how much to buy, and provides benchmarks for evaluating progress and adjusting future plans. 

Having too much inventory (or the wrong type) during certain periods can slow your cash flow and reduce profits with too many markdowns. On the other hand, if you under-buy (meaning buy too little product) and miss sales opportunities, then you are not making your potential profit (plus damaging the customer experience). A retailer can be sure to stock the right amount of the right products at the right time by using an Open-to-Buy plan. 

How to calculate OTB – its formula?

As per retail textbook, its formula is simple i.e.

EOM (end of the month stock level-desired estimate)
+ Sales (month actual)
+ Markdowns (month actual)
– BOM (beginning of month stock level-actual)
– Merchandise on order (or stock in pipeline/transit).
_______________________________
= Open-to-Buy (Dhs/ AED amount available for new purchases)

For example, a retailer has an inventory level of Dhs 150,000 on March 1st and planned Dhs152,000/- End of Month inventory for March 31st. The planned sales for the store are Dhs 78,000 with Dhs 7500 in planned markdowns. Therefore, the retailer has Dhs 87,500/- Open-To-Buy at retail. (Here there is no merchandise on order).

Now if you operate your brand at 50% margins then multiply Dhs 87500 x 50 %, you shall get OTB budget at cost i.e. Dhs 43,750/-

In other words, how much inventory can I buy without getting myself in trouble? It is also the process of planning merchandise sales and purchases.

Advantages:

OTB brings a balance to stock on hand inventory and future purchasing. This balance allows you to respond to selling trends in a timely fashion.

Since I have been personally involved in leasing management i.e. location scouting for brands that I have handled in the past and currently, I shall explain this in easier layman terms.

Consider merchandise sitting on that shelf is the tenant. Good tenants pay the rent on time by ‘turning’ or selling frequently. Bad tenants are the ones that don’t sell quickly and sit on the shelf for months. They take up valuable selling space that could and should be given to a faster moving product.

As the landlord, ask yourself how long can you afford to have non-paying tenants on your shelves before it negatively affects the total retail operation?

Good inventory control is critical to ensuring an adequate level of stock is on hand for the number of sales being generated.

My personal advice (based on my retail experience in Material resource planning with the leading Middle Eastern retailer):

a)    Before placing your Open-to-Buy plan into operation, ask yourself if each number is realistic. Does it make sense for the way you do business? Keep in mind that many of the figures in your inventory plan are only guidelines. A good rule of thumb is if your actual ending inventory is within 6-8 percent of your plan, you are doing very well.

b)    Be cautious about offers of quantity discounts or free freight if you increase the size of your order significantly over your normal purchasing levels. Most suppliers tend to offer free freight if brands commit to buying certain quantities and this is a trap as the supplier is trying to upsell his quantities to you with an incentive.

c)      Don’t hesitate to markdown slow-moving merchandise. Make the markdown instantly appealing to the customer by offering at least 25% to 40% off the retail price. The faster it is off your shelves, the faster you can bring in a better-selling product that will have a higher profit margin

In the case of fashion or seasonal merchandise, an Open-To-Buy answers the question of how much to buy, but not necessarily the question of which specific items to buy. For that, a detailed assortment plan is necessary.

How the Planning process works?

The planning process begins with building a sales plan.

Once a sales plan has been developed, the next piece of the planning process is to build an inventory plan. The question to ask is this: "How much inventory do I need at the end of each month to support the next month's sales (in some cases the ending inventory may need to support more than just one month of future sales), as well as maintain effective merchandise displays?"

From there, other things like inventory adjustments and markdowns need to be planned.

Finally, from the plans that have been developed, an inventory receipt plan can be arrived at. For any given period (month or week), the planned inventory receipts are the planned ending inventory, plus the planned sales, markdowns and inventory adjustments, less the prior month's ending inventory. Stated another way, the planned inventory receipts answers the question, "How much inventory do I need to bring in to cover my sales, markdowns and adjustments, given my planned beginning inventory, in order to end up with my planned ending inventory?"

A Practical tip from Planning expert Mr Jude Thomas, as he shares his experience with upcoming planners.

Case study:

Brand Benetton uses this statistical tool very innovatively along with their supply chain strategy.

Normally brands in the traditional/conventional way of production dyes complete cotton yarn with specific colours and then produce garments like sweatshirts, tees etc but Benetton does it differently.

Benetton dyes only certain quantities of sweatshirts, tees etc in various colours and sends to their stores, based on the sales movement of specific colour and type (tees, sweatshirts) then only they dye the complete yarn with colour that is fast moving in their stores.

My friends in retail would argue about the loss of time in getting the feedback from stores about which colour is moving fast, that’s where your smart MIS systems come to play, which can give you reports in a dashboard format.

Benetton has mastered this function of getting the feedback from the shop floor to production lines in minimal time period thus they avoid producing colours that would not sell or move thus preventing overstock at production facility stage itself.

This is what I call learning from internal systems and continuously improving your processes to optimize returns or retail dollars.

About the author:

Ritesh Mohan is a passionate retail professional with over 20 years in the retail sector, handling some of the biggest brands in beauty, fashion and fragrances retail & FMCG sector. He has been instrumental in the growth of some of the regional brands as well in Middle East region. He specializes in Retail management, Product development, Brand management, Retail Operations, Sales Management, Business Management & Empowering business owners with his wisdom & experience of around two decades in the industry. He can be reached at riteshmohan@yahoo.com

How to get high in life by developing Resilience & handle rejections.

My inspiration to write this new article comes from an Urdu poet Iqbal (1930s), who once quipped:

“Khudi Ko Kar Buland Itna, Ke Har Taqdeer Se Pahelay 
Khuda Bandey Se Khod Poche, Bata Teri Raza Kiya Hai”

Its literal translation for my readers who are not well versed with Urdu:

“Develop the self so that before every decree

God will ascertain from you: “What is your wish?”

These powerful words are so relevant in current times wherein there is so much pain in the corporate world, people are losing jobs in name of management jargon ‘corporate restructuring’. Myself is getting on an average 5-6 resumes every day in my mailbox from everywhere across region & world and hope the same is with my network connections.

This article is my attempt to alleviate some pain in people by inspiring them “to be the change that they want to see in the world”.

I recall a wonderful sentence which says “Change yourself and your perception and you see the whole new world opening its arm for you”.

I may be sounding too positive but I cannot help since my blood group is also “O positive- joking..”.

I strongly believe that it’s only by “Being Positive” we can overcome any challenges.

As a case study pedagogy (thanks to my teachers of Retail management course in IIM-A), I always love to follow and study cases from corporates as an example.

Case 1: Netflix:

Blockbuster refused to buy Netflix, in fact, Netflix promoters were literally laughed out of the meeting for $50 million deal.

Today: Netflix is worth more than $100 billion (And where is Blockbuster?)

Case 2:

George Bell, then CEO of m/s Excite, refused to buy Google for $750,000

Today: Google is now worth more than $498 billion (and where is Excite?)

Case 3:

Ross Perot refused to buy Microsoft for $ 60million.

Today: Microsoft is worth $ 507 billion & growing daily (and nobody knows where Ross Perot is?)

See the relevancy of Urdu poet Iqbal’s words in today’s business scenario.

“Develop the self so that before every decree

God will ascertain from you: “What is your wish?”

When people say NO to you, just keep going! Go all out and write your own Destiny but Never Give up.

Your time shall come wherein these people later will be telling everyone how they met you and wish they would have joined you!

Contact me on riteshmohan@yahoo.com in case you are looking at the fresh perspective of your business strategy, I would be glad to share my wisdom with my industry friends and connections.

About the author:

Ritesh Mohan is a passionate Retail professional with over 20 years in the Retail sector, handling some of the biggest brands in beauty, fashion and fragrance retail & FMCG sector. He has been instrumental in the growth of some of the regional brands as well, in Middle East region. He specializes in Retail management, Product development, Brand management, Retail Operations, Sales Management, Business Management & Empowering business owners with his wisdom & experience of over two decades in the industry.

Visual Merchandising – A Silent Salesman in Retail.

As I embark to write this article on visual merchandising which is often kept at last number in the priority list of Retail CEOs, COOs or is often left to Operations team to decide & manage along with store operation. I feel it is important to highlight the importance of Visual merchandising in brand building initiatives and developing loyal customers for the brand.

During the course of my retail journey, I got hands-on experience in managing VM teams and leading VM functions for a couple of middle-eastern brands in my retail career and I have often considered it and have given this function more priority than Marketing or advertising functions in retail mix.

It is my sincere attempt to clarify some fundamental principles of Visual Merchandising to brand owners, retailers and retail professionals so that they can re-energize their brands using Visual merchandising strategy.

Visual merchandising, also known as the 'silent salesman', suggests selling by display and presentation. Visual merchandising focal points are situated strategically to circulate the customer in the store and communicate the capabilities and advantages of the merchandise.

This is completed by converting a passerby to a browser with an successful window display, a browser to a spender via the process of 'conversion', a spender to a major spender by increasing the 'ticket size' assisted by the method of cross-merchandising.

Extension of Brand’s Identity and communication: Visual merchandising is an extension of Brand’s image and should be in sync with brand’s communication strategy.

Imparting outstanding Shopping Experience Visual merchandising enhances the shopping experience by creating suitable ambience, producing an image of the store in the minds of the customers via a combination of colors, display presentations, graphics, lighting, forms and fixtures. If completed in an exciting and dynamic fashion, the shopping experience would be pleasurable for the consumer and make him/her come repeatedly.

Communication Tool Visual merchandising communicates to clients the right message about the merchandise by projecting the latest trends, colors and fashion in apparel retailing. Visual displays are the great communication drivers & deliver an opportunity for retailers to sell a variety of merchandise.

Theme displays based on a season or an event is employed to promote a proper product range.

Coordinated displays contain items that are typically utilized/ sold/ consumed together, growing several purchases besides educating or informing the customer. Classification dominant displays contain all varieties of 1 item, are used to convey the impression of a wide selection.

Importance of VM strategy in Purchase cycle: Consumer’s perceptions, aspirations, motivations and memories play an important role in purchase cycle.

VM alters the perception and attitude of the consumers, forcing them to buy the product in a way that he/she enjoys purchasing goods thus leaving an everlasting shopping experience.

31% of the consumer’s purchases in lifestyle products are impulse purchases thus a store with good displays and theme and décor attract eyeballs, thus increasing footfalls and thus converting footfall into sales.

78% of shoppers recall store name when they liked store window display, interiors or music

How well the store presents its merchandise using displays relates to the generation of brand imagery. Involvement of sensory, emotions, attitudes during the buying process decision provides enjoyment and satisfaction to shoppers.

Visual merchandising help in following ways:

Exterior presentation: sign boards, store exteriors, store signage, window displays and banners.

Store layout: merchandise flow, category zoning, ease of accessibility of merchandise, lighting concept.

Store interior presentation: Merchandising principles, color coordination/ stories, merchandising techniques using mannequins, lighting, music etc, using props to highlight product, pricing signage’s to communicate “Hot deals”, floor and wall coverings, space design to ensure proper circulation of customers across the stores, defining hot and cold walls in store layout process.

Visual Merchandising offers a Multi-sensory experience for the store to its customers.

Live Displays are used sometimes for product displays at the entrance of the store to demonstrate the use of products. Children’s stores often use people dressed as cartoon characters to attract kids’ attention.

Island Displays are displays of merchandise found generally at the entrance of stores to announce new arrivals, special offers, etc. A display podium is erected and decorated suitably.

       Dynamic Window displays using Holographic projections

I would like to end my article with a video of my interaction with Mr Anand Kumar, Executive Director- ABRA VM&SD as he shares his wisdom of running a company which specializes in creating a visual retail environment for some of the biggest luxury brands in the Middle Eastern region. Anand shares a couple of tips for Visual Merchandising managers and Retail CEOs which is very relevant in current times of economic downturn and would help retailers develop their Visual merchandising strategy in sync with overall brand strategy.

Contact me on riteshmohan@yahoo.com in case you are looking at getting the fresh perspective of your business strategy, I would be glad to share my wisdom with my industry friends and connections.

About the author:

Ritesh Mohan is a passionate Retail professional with over 20 years in the Retail sector, handling some of the biggest brands in beauty, fashion and fragrances retail & FMCG sector. He has been instrumental in the growth of some of the regional brands as well in Middle East region. He specializes in Retail management, Product development, Brand management, Retail Operations, Sales Management, Business Management & Empowering business owners with his wisdom & experience of around two decades in the industry.

 Disclaimer: All images used are for illustration purpose only.

Why does 70% of family-owned businesses fail when they make transition to second generation?

My Inspiration to write on this topic came from one research study conducted by one of leading Management advisory group who had highlighted the reasons pertaining to failures of family-owned businesses as they approach their 2^nd or 3^rd generations.

Passing control from one generation to the next is a critical moment for a family-owned business. It can be positive, but often businesses lose momentum. It can bring a family together, but too often it drives a family apart.

Study reveals:

·        An impressive 88% of current family business owners believe the same family or families will control their business in next five years, but succession statistics undermine this belief.

·        Only about 30% of family and businesses survive into the second generation, 12% are still viable into the third generation, and only about 3% of all family businesses operate into the fourth generation or beyond.

The role that family-owned businesses play in the economy should not be underestimated. For one, they are in fact the most common type of business organizations, this becomes more complex when we talk about Middle Eastern region due to cultural and social sensitivities.

Post deep diving into this topic and post doing my own research by interviewing with industry leaders who are either from a 1^st generation or 2^nd generation of family business, following are my findings as to why the majority of family-owned businesses fail to achieve success in their 2^nd or 3^rd generation.

My few insights:

a) Lack of Leadership & strategy:

Most of the founders of successful family businesses are too overly conservative i.e. they do not have clear vision nor they know how to manage funds either internally or externally borrowed & use it for scaling the business. They lack scalability approach.

b)    Excessive dependence on founders i.e. 2^nd generation leaders often lacks hunger for success which is found in first generation founders. They look up to their first generation leaders for every petty issue.

c)     Too engrossed in the day to day activities/operations, owners often miss long-term vision or strategy.

d)   Secretive style of management :

Lack of information sharing with core management team, lack of sharing of IP (Intellectual property rights), Believes in just informing Decisions and taking control on a daily day to day operations.

2. Lack of succession planning

As per Mr Vijay Madhavan, Sales Director of Petra insurance Brokers LLC, this is one of the main reason as to why family-owned businesses fail to survive in their 2^nd & 3^rd generations.

a)    Handing over is hard. 

Company founders have often given their lives to their businesses. So naturally many feel protective and reluctant to step back.

b)    It’s also “Emotional”. 

A good handover is crucial for the business, but it can also have a big impact on relationships within the family. Where there are several children who wish to be involved, someone needs to decide who will take which role. There is always the risk that someone will feel left out.

c)     'Eldest first' rule doesn't have to apply. 

The best succession plans are based on a cool-headed appraisal of the different strengths and preferences of the next generation of potential leaders. That might mean favouring younger siblings over elder siblings, skipping a generation or going outside the family.

d)   The next generation may have a different perspective. They may want to take the business in a new direction, seek a new relationship with employees, and branch out into new markets. Their aspirations need to be understood and aligned with the overall plan – if there is misalignment it needs to be addressed.

One of the best ways to address these issues associated with Succession planning is by:

“Combining energies of new generation and experience of the older generation”.

Another way which I feel has been successfully implemented across family-owned businesses (likes of Tata group, Hindalco or in some of the Middle Eastern family-owned businesses).

 I strongly believe, “Sometimes, it's best for the family to step back”.

When the business has reached a certain size, the founder might decide it needs the leadership of a seasoned CEO from outside the family – potentially disappointing children who had hoped to take over.

Ownership and management are two different things and offer different ways of contributing to the firm's success. Family members can play an important role in the firm’s success by being good owners, putting in place strong governance and processes at the ownership level.

3)    Introduce the concept of Wealth management in sync with succession planning.

Founders can avoid failures of their businesses by:

a) By defining internal equity of family members at the entry of business and at the exit of the business.

b) Introduction of external equity or PE equity in business in order to take it to scalable levels.

c) Clearly defining compensation for participating family members & non-participating family members.

This is very important as most of the times it is found that Money divides the family and its businesses.

2) Evaluate both Management Buy Out or a Management buy-in options in ensuring the business is managed more efficiently and effectively.

I would like to conclude this article by a quote from Mr Sushant Upadhyay, Client Partner of m/s Corn Ferry who quoted:

“De-link Ownership from Management”

 I feel this concept and his quote summarizes the entire topic and would help all my readers, who are either first-generation business owners or 2^nd generation business owners to plan for their organization’s future and growth initiatives.

Contact me in case you are looking at the fresh perspective of your business strategy, I would be glad to share my wisdom with my industry friends and connections.

About the author:

Ritesh Mohan is a passionate retail professional with over 20 years in the retail sector, handling some of the biggest brands in beauty, fashion and fragrances retail & FMCG sector. He has been instrumental in the growth of some of the regional brands as well in Middle East region. He specializes in Retail management, Product development, Brand management, Retail operations, Sales management, Business Management & Empowering business owners with his wisdom & experience of around two decades in the industry.

Markdowns – A strategic business tool for Inventory planning.

As most of my readers know that I am very passionate about Retail management and have been responsible for managing some of the regional brands in terms of Retail operations, Brand management, merchandising planning, Sales, Visual Merchandising.

I have always noticed that most of Retail CEOs/ CFOs often takes a downward look when it comes to “Markdowns”. I recall, my previous boss (who is also my mentor) used to give me a very awkward and nasty look every time I proposed using Markdowns as Marketing tool/ event.

My article will talk about as to how markdown planning can help retailers increase sales, improve margins and better manage product lifecycles.

It is my attempt to clear some concepts and convince senior management to adapt to this wonderful planning tool which can prove to be very effective in their Inventory Planning goals.

Markdowns are often associated with margin degradation and profit loss—and some companies believe that cutting prices for their products could negatively impact their brand image. Although inevitable, retailers have historically viewed markdowns as a necessary evil designed to help sell old or slow-moving inventory.

A) View Markdowns as a function of Price Elasticity: Matching Perceptions with Pricing.
An example of a markdown would be if you had a sweatshirt for sale that was originally priced at Dhs 100 and after one month of slow sales, you decide to markdown the sweater to 20% off, making it Dhs 80 at retail.

Although you just lost Dhs 20 of your intended markup on that sweatshirt, in return, you are also inviting more people to purchase it at a price they may prefer vis a vis the original Dhs 100 price. Since the shirt had not been selling well at Dhs100, offering a nice, mark downed price can often result in sales that would not happen otherwise. Hopefully a 20% discount will do the trick, however often you will find that you need to continue your markdown strategies based on slow sales, moving product from 20% off to 30%, 40% and more if necessary.

Most Retail CEOs and CFOs (especially organizations run by finance professionals and not by Retail mindset professionals) often confuse Markdowns with Discounts model.

A discount is a reduction in the price of an item or transaction based on the customer making the purchase. Many retailers offer discounts because they find that customers return to their store versus others because of the discount provided to them. Discount offers “Instant gratification”.

Customers often enjoy the advantages they feel that discounts often give, such as being a preferred customer and therefore getting special treatment. Some boutiques & Spas offer friends and families discounts, which benefits both the retailer and those getting the discounts. It’s a win-win on both sides.

Both a markdown and a discount can be temporary or permanent, depending on how you market them to your customers.

An example of a temporary discount would be "Get a discount equivalent to your waist size". If your waist size is 32 then avail 32% discount on your purchases.

A temporary markdown example would be if you had a one day sale, offering mark downed prices for only a specific amount of time.

A discount strategy is more Tactical whereas Markdown strategy is more organic in nature. Both should be an integral part of the marketing mix.
I recall the statement of Sir Martin Sorrell (CEO, WPP- an advertising agencies conglomerate), who once quipped, “Discounts are like bad cholesterol and Markdowns are like good cholesterol; there has to be less dependence on discounting model, instead push more brand-building efforts”.

B) Using Markdowns to control Inventory Ageing:

You can use both discounts and markdowns as part of your sales strategy to help make the most out of your inventory sell thru and ultimately, your sales goals.

Wasting your retail floor space with products that are not selling will not help you at all, so consider how markdowns and discounts may be able to work for you in your sales strategy.

C) Tie your Markdown planning with your financial plan- how much hit are you willing to take in markdowns?
A markdown plan means nothing if it’s not tied to the financial plan. Retailers should determine how much they are willing to spend on markdowns to hit their financial targets. This information ideally flows either from CFO/ CEOs while preparing budgets for next fiscal.

It’s equally as important that retailers are able to not only execute on the markdown plan once it’s in place but also monitor it in real time. This will ensure that adjustments can be made as the season progresses.

D) Determine early on which items you are willing to reduce in price over time and for how much:
It implies whether you want to run it on category or on specific collections. Monitor its sales-through rate and then decide the markdown %.

E) Managing Product lifecycles more effectively:

Smart retailers will leverage effective markdown planning to not only ensure that there is less stock left over at the end of the season but to also manage new product introductions and phase-outs.

Caution to Retailers who shy away from Markdowns strategy:

Retailers that avoid putting a markdown plan in place may experience increased cannibalization of new product lines and decreased sales.

The impact could even extend to the store level as new and old products are shoved together on store shelves or displays, resulting in cluttered and disorganized stores that even the most loyal customers will find difficult to shop in.

A Perfect example is “ Part Sale” that we find very commonly in retail stores these days in the Middle East, wherein new merchandise is being sold with that of discounted merchandise in separate enclosures or gondolas.

I would like to end my article by sharing a video wherein an industry practitioner and a successful retailer Mr Kamel Shaban, MD -Capacita brands, has offered one valuable tip to Inventory planners and Merchandise Managers as to how they can use Markdown strategy to keep “freshness of assortments” in their stores by avoiding discounting model trap.

           
In case if any of my readers, want to know & streamline Inventory planning strategy for their brand then I would be more than glad to share my ideas acquired while practising & closely following this topic.

You can reach me on riteshmohan@yahoo.com in case this topic also excites you.



About the author:
Ritesh Mohan is a passionate retail professional with over 20 years in the retail sector, handling some of the biggest brands in beauty, fashion and fragrances retail & FMCG sector. He has been instrumental in the growth of some of the regional brands as well in Middle East region. He specializes in Retail management, Product development, Brand management, Retail Operations, Sales Management, Business Management & Empowering business owners with his wisdom & experience of around two decades in the industry.