Fashion in Crisis: 6 Merchandising Best Practices
It’s a critical period for merchandisers and buyers but trading strategically is the only way to get out of the COVID-19 slump.
In a recent webinar hosted by our CEO, Kendrick Wong and Sarah Johnson, Founder of Flourish Retail and former Merchandising Director at Asos, Sarah shared the ‘new’ set of practices for merchandisers in navigating this crisis.
Here are the key takeaways:
- Identify the ‘gap’. The first thing you have to do is assess how far off-target your sales currently are. The next course of actions will be dictated by the size of the gap.
- Re-forecast based on current market data, not historical patterns. This is an unprecedented event, and previous trading patterns will not be sufficient. Re-forecast sales for the worst-case scenario. It’s better to overestimate than to come up short.
- Take account of exit margins. A key to mitigating losses is adjusting your margins. Having a clear understanding of not only intake margin but also the net margin is vital in protecting the bottom line. A big part of this contingency plan includes discounting, so find room to modify margins and alternate between deep discounts and shallow discounts.
- Adjust opening stocks and OTB. Supply chain disruptions will cause inventory issues and affect product phasing. Break apart the product range and find opportunities to re-allocate held stocks to the next season or push more investment into products with faster rates of sale.
- E-commerce is now the priority. With non-essential businesses unable to operate physically, e-commerce is paramount to survival. The shift to online shopping will likely continue even post-crisis, so ensure fulfilment and distribution centres are able to accommodate this.
- Keep a close eye on your competitors. E-commerce will be saturated as more brands move online. Other brands are likely to be discounting too, ensure prices offered are on-par with competitors. Constantly adjust pricing according to market changes – the trading season will endure peaks and throughs, the key here is to price optimally during a peak to gain higher margins.
Our last piece of advice is to remain calm and harness your merchandising skills as much as possible. Avoid knee-jerk reactions such as cancelling stocks or liquidating your entire inventory. The best way to weathering this storm is by being flexible and trading methodically.
Learn more on the key COVID-19 response strategies implemented by global retailers in our Fashion Retail & COVID-19 Crisis report.
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