15

Annual Planning: Footwear

Model stock by month, by styleMonthly model inventory by model

and size

Model Stock by Style

Footwear Sales PlanTotal Monthly Sales in $, Units

Turn Target

Footwear Category Plan% of Sales by Category

Styles carriedTurn target by category

Monthly Sales and InventoryUnit and $ sales by month by categoryTarget inventory by month by category

Determining a model stock at the style level requires establishing an overall sales and category plan to ensure appropriate inventory at all levels.

16

Inventory Management Considerations: FootwearSuper Performer (>24/month/door) : “A” Styles

• Eliminate out of stocks• At least 2 color options in core sizes (9-12, 7-10),

multiple widths

• Minor in-season adjustments• Two deliveries/month

Core (>8/month/door): “B” Styles

• Eliminate out of stocks• 2 color options in four middle sizes

• Future based on past performance• Fill or correct based on current performance

Secondary (>2/month/doors): “C” Styles

• Limit out of stocks in middle sizes• 1 color option, 1 width• Do no fill in last 2 months of life

• No recurring futures, actively manage to model stock

• Only fill in middle sizes, accept special orders on periphery sizes

Specialty

• Manage based on lifecycle, accept out of stocks at end of life

• Accept special orders

• Fill in as needed in core sizes• Do not fill within 3 months of change except in

middle 2 sizes

17

Determining Model Stock

6 Months of sales for top 40 models in each gender2

Inputs

Sales plan by month and category1

Range of unit sales by model and size2

Outputs

Classification by model1

Size Run and Confidence by classification (A,B,C)3

Model Inventory by model and size for the month3

Projected inventory $, Sales $, Margin $, GMROI, and swap sales/special orders by class and gender

4

Projected sales, swaps/special orders by model, size, and category

5

18

Input: Annual Sales Plan

Monthly Sales $, Margin $ prior yearMonthly Margin %, Sales %Total Sales

1

2

3

1 2

3

19

Input: Category Distribution

Gender % of salesCategory % of sales (for each gender)Average Price by category

1

1

2

2

3

3

20

Input: Top 40

Brand, Model, Category, Units Sold, and Unit Cost for each of your top 40 styles within each gender

1

1

21

Input: Size Runs

Sizes stocked for each class and gender1

22

Running The Model

Select a month from the drop down menu.Press “Run Simulation”.

1

12

2

23

Output: Totals

24

Output: Totals

> Inventory at Cost> Projected GM $> Projected Turns> Projected GMROI

> Sales $> Projected Missed Sales, Switches,

Special Orders> Inventory at Retail

25

Inventory Distribution

26

Output: Model Inventory

27

Customizing Size Runs

Scenario 1> Full size run in all classifications

> Women’s 6-12, Men’s 8-14

Scenario 2> Tapered Size Run in “B” and “C” classification

> A: Women’s 6-12, Men’s 8-14

> B: Women’s 7-11, Men’s 9-13

> C: Women’s 7.5-10, Men’s 9.5-12

28

Effect of Size Runs

> Total Inventory @ C: $240,289

> Turns: 3.39

> GMROI: 2.67

> Total Inventory @ C: $191,397 -20%

> Turns: 4.26 +26.5%

> GMROI: 3.35 +25.4%

Scenario 1

Scenario 2

29

Output: Missed Sales Example

30

Output: Missed Sales Example

31

Output: Size Range Tool

32


33


34


35

Logic without the tool

> Segment styles into A, B, C classifications based on sales volume> Specialty styles are managed independently

Segment

> Determine size run for each classification, tapering the sizes carried to reduce stock in shoulder and fringe sizes in B and C styles

> Sufficient inventory in A and B styles will ensure that customers always have an option in each category, in each size offered

Size

> Maintain sufficient inventory to achieve near 100% in stock of all “A” styles> Special order B and C fringe/shoulder sizes as necessary> Cut off orders at least 1 month prior to update for “A” and 2 months prior for “B” styles> Place single future orders for “C” styles to establish initial inventory and manage A/O> Train staff to be knowledgeable in segmentation and size availability to facilitate swaps and appropriate

customer service

Maintain

> Implement annual and season planning cycle including category strategy and assortment planning

Plan

36

Follow up> Model and presentation available online.

> TheIRRA.com

> KarnanAssociates.com

> Model Webinar

> A 30 minute webinar will be scheduled during December to demonstrate how to load data and run the model. We’ll send details to the IRRA listserve.

> Questions, Comments

> [email protected]

> [email protected]

37

Appendix

38

Effect of Size Run TablesScenario 1

Scenario 2

39

What Exactly Is It Doing?

40

Strategic Value• Strategic value

• What category is this model in?• How many other models are in the category?• Will we carry close substitutes?• Is this a model we carry in widths, multiple colors, or fringe sizes?

• Size Run• Minimum size run of 5• Can we justify carrying additional sizes?• For fringe categories, we can’t offer all options in all sizes.

• Updated Schedule• Cut off replenishment with the goal to sell down before model is

updated• Maximum of 1 month of supply when the new model arrives

41

Franchise Styles

Program Monthly

Metrics Exceed Targets

Important but dangerous

Fill or kill

Calendar is king

Niche products

Fill in to model stock

Keep Specialty Special

Strategic products

Taste and chase

Continually reassess

Product Selling Behavior

Change

Volu

me

Low High

Low

High

42

Category StrategyDefine Category

Define Role

Evaluation and Scorecard

Strategy

Tactics

Evaluation

What does the category specific include?Ex: Running Shoes includes all running footwear for men and women. Excludes kids and casual shoes.

Traffic driver, convenience, destination for seasonal purchases, a one-stop-shop. Retailers may assign different roles to categories within their stores depending on the customers they want to attract.

What are the metrics and KPIs that will be used to measure the category? What is the category’s current performance? What are the goals for the next season?

What specific actions will we take within this category to meet its goals?Ex: 1 feature per month in the newsletter for a new accessory.Ex: Give 75% of customers a new pair of socks for try-on.

How is the category performing? Were the goals met or exceeded? What tactics were successful? Where was growth or decline above or below expectations?

How will the goals and objectives be met?Ex: Expanding the number of SKUs and brands within bras to grow it into a destination.

43

Category Strategy Template

Areas of Growth Areas of Decline

LY Target

Sales

GM %

Turns

Category Definition and Role

Strategies Tactics Key Needs

44

In-Season Management: Keep, Kill, or Chase?

Objective of in-season assortment and management is to identify: > Solid performers to keep> Low performers to kill> Best performers to chase

45

Inventory Management ProcessDepartment

Category

Class

SKU

Size

• Footwear• Accessories• Apparel

• Inventory versus my target/ideal?• Increase or decrease based on the sales plan?

• Women’s Footwear• Men’s Apparel• Nutrition

• Inventory versus my target/ideal? Am I under or over allocated?• Which category (ies) do I need to investigate?

• Men’s Stability Shoes• Women’s Tops

• Is the allocation correct? • Which classes are over/under performing? • Increase or decrease a class? • Am I positioned for success for the

month/quarter/season?

• Women’s Adrenaline• Men’s Sherpa Short• Mint Chocolate GU

• Over or under the model inventory? • When is the SKU retired/replaced?

• Women’s Adrenaline 8.5• Men’s Sherpa Short M• Mint Chocolate GU 6-

pack

• Complete size runs? • Adequate inventory in middle sizes? • Across the class, and category, are there sufficient

options to meet customer needs?

NEXT

Documents

Transcript of NEXT