Your management undoubtedly presents you with a departmental operating statement each month. Usually, planned figures appear alongside the actual ones. Figures for the previous year are also included by some stores.
Your planned figures were set up with management's profit goals in mind. Wherever your actual figures fall short of plan, your profit is in danger.
To help you correct weaknesses as soon as they appear on your statement, and before management is obliged to apply emergency measures, you will find here a check list of possible causes and cures. Suggestions are collected under headings that correspond to the entries on typical departmental operating statements.
No check list can include every last possibility, but those that follow can serve as a starting place for your own analysis of your operation, The causes and cures suggested are those most likely to be relevant to fashion departments, and most likely to be within the buyer's own control.
Initial Mark on Percentage Below Required
Are you pricing mechanically, without taking the little extra mark-on that an occasional outstanding style or item can bring?
Are you buying mechanically, sticking to the same cost levels for the same retails, without investigating others?
When you bring in some merchandise at a lower than required initial mark on, are you averaging things out by bringing in some that will give you more than your required percentage?
Do you watch transportation charges? Are you following your traffic manager's advice on routings and quantities, and insisting that resources comply with instructions?
Are you buying from nearby sources if these are good?
Have you checked on the possibility of buying FOB store from some or all resources?
Do you really shop the market, with the aid of your resident buying office, to make sure you are getting the best possible buys?
Are you paying higher prices to get extras built into the merchandise (such as special finishes, special trims, etc.)? And if so, have these extras really added to the value of the merchandise? Enough so that people will either pay more or buy more readily?
Can you concentrate more of your business than you now do with resources whose goods yield you consistently good initial markon?
If your initial markon is low in some areas, are there compensating factors (such as low markdowns, cooperative advertising allowances, fast sales) that would appear to justify the low figure?
High Markdown Percentage
Have you analyzed markdowns by cause to help pinpoint the trouble spots?
Have you checked into all possibilities for improving sales and keeping inventories low?
Did you take some markdowns simply because you wanted to dispose of goods inherited from your predecessor? Were those markdowns really necessary?
Have you noticed any vendors on whose goods markdowns were particularly high or low? Any sizes, colors, prices, styles, that seemed particularly susceptible or immune to markdowns? You may find guides to future buying here.
Did substantial amounts of markdown arise from special purchases for fashion promotions? From prices reduced for promotions? From spoilage, damage, etc., to garments used in fashion shows? Did the events that led to these markdowns pay off sufficiently in sales and prestige to make the markdowns cost worthwhile?
Did some markdowns come about because you failed to catch and charge back goods that were not as ordered, or that were defective? Did you bring some of your purchases into the store too late for the period of their strongest demand?
If shipments arrived late because of vendor-caused delay, have you checked to see if you have any recourse?
Did you postpone needed small, early markdowns - only to take drastic cuts later on?
Do you keep a markdowns rack in your department to attract bargain hunters to your slow numbers while these are still salable at only a slight reduction in price?
Do you minimize markdowns due to spoilage by insisting on spotless housekeeping in your department, prompt picking up of dropped garments, and constant straightening of bins, racks, and displays?
Do your sales people know how to handle and fold merchandise that has been opened for customer inspection?
Do your sales people know where to go with garments that have loose buttons or lost snaps, so that these can be repaired promptly?
Do you and your assistants know what repairs are cheaply made in the store's workroom, and which repairs are more economically handled by giving the customer an on-the-spot markdown to take the garment as is?
Do your fitting rooms have signs asking customers to remove lipstick before trying on garments? Tissues - to make it easy to comply?
Are some of your people winking at abuse of the employee discount privilege? For example, are they letting some fellow employee buy garments "for personal use" in several different sizes?
High Delivery Expense
Do you remind your sales people to suggest that customers take purchases instead of having them sent?
Do you have convenient carry boxes and bags to encourage take-withs?
Do you keep your branches well enough stocked so that you do not have to fill large quantities of requests through deliveries to customers?
Do your sales people know how to wrap or pack your department's merchandise into the smallest suitable bag or box? Small packages encourage take-withs; if delivered, they cost less to handle than large packages.
Can you have someone from delivery or personnel talk to your sales people on reducing delivery costs by writing clearly, getting ad dresses completely and correctly, and trying to avoid COD transactions?
If items that are returned by customers for repair must be sent to the vendor, can you have the vendor drop-ship such items directly to the customers' homes?
If you are sending garments outside the store for monogramming, or if you are special-ordering monograms, can you have delivery made directly to the customers?
If your high delivery costs are due in part to an effort to get more mail and telephone orders, were your markons on the featured goods high enough to cover this element of cost, too?