Many of the issues concerning stock holding faced by my small, independent retail clients can be attributed to too little, or even no, advance sales and stock level planning. Time spent planning is not an ‘unaffordable luxury' - in fact, it's absolutely vital to the sustainability of small, independent retailers.

Here's 4 steps to help you with your future sales and inventory planning:

Step 1: Plan future sales

To be able to effectively manage your stock, you need to know what you expect to sell in the future. Although as an independent retailer you may not have the advanced sales forecasting systems used by the larger retailers, setting up a straightforward spreadsheet using your historical sales data provides a cost effective alternative.

o Begin by entering the previous years sales data, by month and key product category.

o Then adjust the data to take account of ‘impact factors' such as the weather (good or bad), one-off events & promotions, out of stocks, supply issues, etc.

o Next consider the sales potential for the season ahead and factor in a +/- % for each category (or for larger categories suggest breaking sales forecast down by sub-categories, suppliers or styles, etc). To help with this, be sure to keep up to speed with what's happening in the market place and read up on market trends and predictions by other ‘experts' in the sector.


Step 2: Plan stock levels

The aim is to have enough stock to cover forecast sales, and also provide a ‘buffer' in case of higher than anticipated sales or late deliveries by supplier. You should also ensure sufficient stock to create in-store and or window displays. Having more stock than you need at any point in time is pointless and likely to be costly as buying too far ahead often leads to over-stocks. Instead plan to have enough stock on hand at the end of the month to cover the next 2 - 3 months sales.

Step 3: Schedule stock orders

Once you've forecast your monthly sales and ending stock holding by month, deciding how much stock to order in is a much more straightforward.
Add together the next month's sales forecast and the month end stockholding.
Then deduct the previous month's ending inventory.


Step 4: Plan seasonal markdowns

Planning markdowns in advance, helps retailers to protect their profit margins. By scheduling the date of the first seasonal markdown ahead of that season starting, you can plan the stock you want to have on hand on that date, and consequently your % markdown.


Having created your pre-season plan, ensure you actively use it to monitor progress throughout the season, as sales trends start to evolve. Review sales on a weekly basis, and adjust the future sales plan accordingly. Don't forget to also adjust your planned stock orders in line with your revised sales plan. If sales are ahead of forecast, then you should ensure you have the stock to maintain the drive, or if sales are below forecast, the sooner you adjust your sales and ordering plans, the less likely you are to have excess stock requiring markdown at the end of the season.