How to Plan, Buy and Manage Your Inventory in 2024 with Mary Landgrebe, Management One

Okay. Raise your hand if you maybe are not naturally a numbers person. This was definitely me. You guys have probably heard me mention this before, but I went to school for communications, which is probably the exact opposite of numbers. And I find that so many entrepreneurs in the retail and boutique industry are actually quite similar. We get into this business because we love the art side of the business, the people, the customers, all the pretty things, right, the products. But the thing that intimidates retailers most often is actually the number side, the retail science side of the brain, the financial planning and the inventory management and figuring out exactly how to pay yourself. And that's why my friendship with Mary from Management one has grown so deeply. Mary understands, of course, both the retail art and the retail science side of the brain and has made it incredibly easy for so many retailers to really break down and make make sense of their inventory. How much inventory you need to have on hand, what does your markdown strategy need to look like? And how can you start planning and buying for your next season right away so that you can have less inventory left over at the end of the day and more money in the bank? Isn't that the goal at the end of the day? Mary is someone I also really admire because when it comes to the world of inventory management, she was one of the very first, I'll say, inventory experts that really latched onto and understood how to use Shopify so she can blend her love and knowledge of numbers and inventory across brick and mortar boutiques, online boutiques, comments sold and live selling boutiques, and really online retailers and product sales stores of all types. Now we have so many things to talk about when it comes to planning your numbers. But I'm going to say this in today's episode. The most important thing we're going to talk about is specific to what is happening right now in our industry and what we think is going to come in 2024. We both have seen so many, really, I'll say, worrisome posts and conversations about how to manage inventory in 2024 that I think are going to have a detrimental impact on so many businesses. So today we wanted just to take a minute to, I won't say second, set the record straight because I don't think there is a right or wrong or a black or a white way to manage your inventory. But I do think there are some tried and true truths and some guidelines that we definitely should be thinking about right now in this economy when it comes to managing inventory. So get ready to make retail math fun and easy to understand. Let's talk about your numbers, your inventory, and specifically what's going to go down in 2024 with Mary Langebury from Management One. Let's talk about your business strategy and the juicy details of what actually works, from mainstream fashion to fashion on Main street and the entire ecosystem behind it. How do we scale your company and do it with the balance and the happiness that we all seek? Let's hear from those insiders, experts, and strategists that actually make it happen. I'm your host, Ashley Alderson from the Boutique Hub, and I can't wait to chat. You guys. Welcome back to the podcast. This week you're in for such a treat. I feel like this is gonna be straight up honest girl talk. Mary, are you ready for this?

I'm so ready. I feel like I get to girl talk with Ashley. Not enough. So we have to do a podcast to catch up.

I know. I'm so excited. We. So we were just laughing before we started to record, because the first time you and I did a podcast together or an interview together, it's when you and I had this crazy realization that we didn't know about each other. Do you want to tell them what it was?

Actually, I. We started talking about basketball, and I grew up in Indiana, and I said something about. About basketball, and she said, well, I'm a big Pacers fan. And I. I had to stop, and I almost passed out because I'm like, wait, what? You're from Wisconsin? How are you a Pacers fan? And she said, well, actually, I'm a Reggie Miller fan. Which was even funnier because I lived in Indianapolis during the Reggie Miller. So she and I had the best time over basketball and Reggie Miller. And we've compared hats and shirts and all things, but I thought I used to follow Reggie Miller around Indianapolis.

I would have done it with you. I totally wouldn't have, kid.

And he'd be sitting in a bar with his hat down and like, please don't anybody talk to me. And I just look at him. I mean, like, I would. Would have never gone up to him.

But you know what's funny about that? Like, I. It's not that Reggie Miller was that handsome.

He was not. He kind of really good basketball player with a really dynamic personality.

Yeah, I always. I feel like maybe this is my personality, but when the Pacers were so big, when Reggie Miller was doing his thing, it was at the height of the Bulls era. And I am like, my personality kind of goes against the grain. Like, if everyone's on board with one team like the Dallas Cowboys. During that time, I was exactly opposite. Like, I didn't want to go with what everyone else was doing. So I loved Michael Jordan and I love the Bulls and I loved watching them play and the Dream Team and all that. But I was like, Reggie Miller is my man and he's like one of the best three point shooters of all time. So it was a good pick. And overcoming adversity. I mean, he was told that he was never going to walk when he was a child. He had braces on his legs. He had to fight through all of this to become one of the greatest athletes in the NBA. So awesome.

And look, and look at us. We work with small business who everybody swears is never going to work. And it's coming to its doomsday. And it's never coming to doomsday. It's coming to its greatest successes.

Oh, I love that good segue. That's really what we need to talk about first today, Mary, is we've got to sound the alarms. You and I both know, man, there are some tough conversations happening in our industry right now. And it's, it's businesses of all types. It's brick and mortar, it's online businesses, it's live selling businesses. And we recently were having this conversation inside of the hub about how are you going to manage your inventory different in 2024. And while I think there was some really good responses to that conversation, there was some really scary responses. And I just feel like, wait, wait, wait, like warning signs are flashing that we have to get to the bottom of some really big mistakes that are about to be made that are going to force people to go out of business if they make the choice they say they're going to make right now. So I know you have a lot of thoughts on this, so why don't you start out? Some of the things that you're hearing that you're like, oh, God, be careful, danger zone.

Okay, so I'm going to go back to the mastermind. When we heard Sam talk about future of buying and that type of thing, he made it very clear that the vendors are really headed into a place where they're going to do more pre orders than ever. And, and what I was seeing was that people are posting, I'm not going to do any more pre orders and I'm going to stop going to market and I'm going to order things for immediate only. And that is not going to work this year. And I hate to say it that way. We've been In a place where there's been a lot of product available because of the way all of the supply and demand happened and fell out with COVID But that's kind of stopped. They've pretty well sold through the inventories and so now they got to make it again. And I think that's going to put us in a position where you've got to go to market, you've got to place pre orders, you also have to have those. The reason people are fearful of that is because they're not getting things when they're promised. They're not, they're not seeing the results that they want to out of, out of their vendors. And so that goes back to, boy, you really have to have that vendor friendship slash relationship in order for this all to work. So I think it takes it to a. I mean, there's just so many things that unfold out of it, but the vendor relationship and placing the pre orders, like really having a plan and thinking it through each season is where it has to go.

Yeah, I would agree with all that. And we could break that down 10 ways. Let's start with this. I think one of the biggest challenges our industry is facing right now and the reason we're having this conversation is all of these boutiques have started to look alike. So many stores are ordering the same stuff. They look like one another. And then Sheen and Teemu and TikTok shops come in and undercut all this and it's all the same, same stuff. So battle number one is you have to have inventory that's different. And so next year, if you only rely on immediates, you aren't going to be different than anybody. You're going to be the same as everybody. And so we have to go back to what does it mean to be curated and unique and. And I think that's getting the unique product. Mary?

Well, you know, it's funny, I put curated, curated as a word that I used over and over in my notes because the other thing that's going on is people losing their confidence around buying. Like, what do my customers. And what they want is they want you to curate the outfits for them. They want you to curate the collections. They want you to give them the look that makes them feel special. And that comes with going to market. I could never encourage somebody to go to market enough. The choices are all there, there's many of them. And if you go and you're you and you have confidence in you and you go with data driven decision making around how much to buy, you can Find the products that are going to not only satisf your customers, but make them happy and delight them and what they're. And what they're buying to make them feel good.

Yeah, I think that they. That's one of the best things about market. Whether you're going to the temp floors or you're going with a showroom and a rep, you're going to find things at market that are not online. There's so many brands that come that have product only available there, or specials that are only available there, or the cuts that are only available there that you'll never see on Fashion Go or Fair or Hub and Tori or anywhere. And so that really is. Is critical. But what said earlier, Mary, is also so true. That's the place you have to build relationships. And I think in order for inventory, just like the flow of your inventory to be successful, you have to have a trusted relationship with your vendors and really have a handful of. What would you say, like three to six top vendors that you know you can really count on.

That's right. Yeah. Yeah, I think that's a good number. Having too many is a risk, and not having enough is also a risk because we've seen vendors go out of business this year, too. So what does that, you know, what does that really look like? From our perspective, we plan based on. On types, so on. On classifications. If you plan based on your vendors, if you say, I'm only gonna buy this brand of Jean and. And you know which gene I'm thinking of. Yeah, you're gonna put yourself in a box, and then you're gonna get customers. You need to make sure you're. You're blended with your selections, but you need to also make sure you have those relationships. If you can't have a relationship, do you really. Is that somebody you want to do business with? And I think our customers feel the same way when they're shopping your store. They want a relationship with you.

Yeah, I totally agree. I think that's so good when you're going to market and, you know, you're sorting through inventory. I think another risk that I've seen people talk about is I'm just going to order less this year. I'm just going to. I'm just going to order a little bit less. But, Mary, I feel like we have to think about what is an expense in our business versus what is an investment, investment in our business. And if you have less inventory, you have less inventory to sell, so your sales are naturally going to fall. Can you talk about how do you assess the quantity of what we should be ordering next year in relationship to risk?

So I've seen that a lot and I've seen people almost unbuy themselves out of business, which is really scary. I'm going to take a percentage of last month's sales and put it towards next month's inventory. Well, when you do that in January to February and you've got to bring in spring and you're taking a percentage of January sales, you're not going to get there. And so it has to be planned out throughout the year based on sales and based on trend and the trend, you know, we always look at last year's sales and that's gotten a lot of us into trouble too because we've had some pretty robust years. And this year I, I, you know, there's, there's some people crying and whining, but there's some people really doing fantastic too this, this past, this past weekend, Black Friday, Small Business Saturday, Sorry, I don't know when this is aired, but was really robust in so many ways and I think it was a good indication of what the independent retailer can do. So I know I got off on a different tangent there. Sorry.

But let's talk about that a little bit more, Mary, before you go on to another topic. So this will air soon, but soonish. I do want to talk about though Black Friday weekend because I know you have real data of what you saw happen. I saw a lot of really positive things as well from both Pink Friday and Black Friday and the entire weekend. What do you think set businesses apart? The ones that really had a lot of success versus maybe the ones who.

Struggled a little bit, the planning. And you know, I know that I'm a broken record when it comes to making data driven decisions, but it really was the people who had planned and thought it through and bought for it. I saw more success in Pink Friday this year then I think it's like it's the snowball running down the hill because it's like it is something else. And I saw a ton of success with that. And we can't ignore Small Business Saturday because it's just become a thing. So. But I think it was the people who really had a plan who had the foresight to buy for it and then marketed it in such a way and engaged their people. So if you just kind of showed up and marked down the summer stuff or those kind of things, they, it sort of worked. But it didn't, you know, you're never going to get as Far as if you buy those margin items that you can mark up to mark down, so to speak.

Yeah, that was a huge win. And I would say just to make a different like viewpoint here of it was not the people who ran the sales that were successful, it was the people who had those very specific promotions and a very specific, specific category and then pre planned it with experiences and events and excitement, made their customers feel really good. Like there was FOMO around it, like those were the things that were successful more than just, oh, I had a sale, 20% off, come on in.

Yeah, no, it really, it really was, it's. People are about the experience when it comes to shopping small retail. They can go to Target, they can go, they can buy on Amazon if they so choose. We hope they don't. Not for this anyway. I mean I still will have my toothpaste sent to me or some commodity, the items. But, but, but the reality of it is people are looking for a connection and a relationship and an experience and that's what they get from the independent retailer.

Yeah, absolutely. So when we're thinking about planning for 2024 and again, how much inventory should I be looking at? And, and even maybe before we talk about inventory specifically, I think something that's going to set businesses apart in 2024 is who makes the data driven decisions like you said, versus who doesn't. Like there's always been this retail art side of the brain and retail science side of the brain and maybe you could fake it till you make it with one or the other, but going forward, I think I'm gonna like put my stake in the sand here. If you don't know your numbers and understand them, 2024 will be a very tough year for you. But they're like, there's hope in that. Like you can do this. It doesn't have to be hard.

It doesn't have to be hard. And I think, you know, a lot of people have had it pretty easy. You know, you buy it, you sell it, you buy it, you sell it. And there have been some really great success stories and people who have built some am businesses that way. But it's come down to you have to know your numbers and you have to be paying attention to those things and you have to be intentional when you're buying and you have to curate collections or outfits or goods or something that's, that's really telling the story of who, who you are, what your business is and what you want your customers to feel.

Yeah, man. Building a brand and telling a story and Solving a problem versus flipping a product.

Did you?

Those are two very different.

Talk about this instead of like data, it's just so important.

Yeah. So break it down at the very like top level. If someone says, Mary, know your numbers, what does that even mean? Where do you even begin if you feel really intimidated by this?

Well, I think there's a lot of resources you can go to. I'll, I'll talk through them all day long. You go to the boutique hub and look, there's resources there. You can call Maryland Group, My cell phone is, my cell phone numbers all over the boutique hub. You can look at these things and kind of sort it out. But you really have to have a structure first. So how do I look at my business when I go to buy things? Do I look at it by, do I look at it by dressy tops versus casual tops or do I look at short sleeve, long sleeve denim bottoms? You need to have that breakdown so you can start comparing your sales to your inventory and with classifications. Yeah, classification, we call them classifications. In Shopify, it's product types. And so the differentiation there has become really interesting because management one's become a much more Shopify centric company, which has been really like when you and I first met and you said Shopify, it was like a bunch of eye rolls in the room and like, oh, why are we, why are we even bothering with this?

And you're like, who's the blonde girl this Shopify will never take off. E commerce is expensive. That's what they told me and they laughed at me. And now who's laughing, Mary?

Oh, it's embarrassing. But we were the two blonde girls in the room. There were actually three blonde girls in the room. And we all, we all knew it. I mean like we're, we're sitting back and listening to it. But the reality of it is we knew, we knew Shopify had a place and it was, it's affordable, it's accessible, it allows people to diversify their business. I'm not a Shopify salesperson. It has its downfalls too, but the reality of it is it is a one stop shop. And but you do have to use some things to make it work to really make those data driven decisions. So the one thing is product types. Product types are really important in Shopify. There's tags, there's collections, there's product types and then they've got types and all kinds of different things that they're changing on a weekly basis. But that product type really points to the reporting. Or you can start Looking. How much did I do in sales of long sleeve tops this week? How much did I do in sales of sweaters? I will tell you, that is so critical to know right now. What did I do in sales in each category and how much inventory am I left with? And what else do I need? And how can I maximize my sales through the season and then into next year? Like, how do I start buying for next year and when do I start cycling all that in? If you're not looking at some sort of a breakdown and you're counting on a total of last year's numbers, you're going to get yourself in trouble this year. I really do. I firmly believe that. I don't mean to be dramatic, but I. I feel like you just have to be maximizing profitability at this point. Yeah.

So when you look at product type, and let's just say you're recapping at the end of the year and you're like, okay, how did I really perform this year? Is that the first place I would go is product type, and I would look at sales by all these different categories. And if I don't have these categories set up yet, if I don't have product types set up yet, where do I start?

If you don't have it, don't look in the rearview mirror. Get them in there now, like, establish some sort of structure now. It's very hard to go back and put it all and put it all in. It's very time consuming. I'm not sure you'll necessarily reap the benefits. When we look at planning, we're looking at, you know, kind of a rolling four or five, six months versus last year. So trends start to happen quicker than last year to this year. So what we saw during COVID was kind of kind of interesting. We went leisure. You know, athleisure became the thing. And so you can ramp up your athleisure, but if you're not watching those sales, you're kind of. There's a visible that you can look at, but the visible doesn't always tell the whole story. How much of that did I have to mark down? Like, it may be gone, but did I have to mark down, mark it down to get rid of it? Then as we evolved, you know, as we evolved out of COVID dresses took off. And so, my gosh, if you didn't have dresses now, denim, boy, if you can't get your hands on denim. So it's identifying what those trends are. You can kind of feel them, but you can see them. Quicker than you can feel them when you're looking at data. And then when you have somebody helping you look at the data too. Not to, not to plug too much. But wait, you know, we can really identify some opportunities in business by just looking at specific data points.

Absolutely. Something you just mentioned, Mary, that stuck out to me from one of the last times you were together or we were together at Mastermind was there was a Mastermind student who was talking about her affection for brands that she carried. And she was saying, rather than focusing on my categories, I was so into the prestige that I carried this brand. I think Spanx was one, I think Love Shack Fancy was another. Like there was a couple like very well known brands. She was like, I was just so proud to carry these, these. And I would look and I would say, oh, I have sales from these brands. Like look at these sales totals. But then she said, then I dug deeper and I realized I was only selling them once I marked them down.

Right.

So my maintained margin on these products were actually crap and I had to quit carrying these brands. I had to break up with them even though I had this affinity toward them. Can you talk more about understanding what is your maintained margin over time? Where are you actually maintaining making your money versus just wearing? You're seeing where you're seeing sales show up.

One of the big, one of the big ways we look at, at margin is in the receiving information. And people go, why do you look at receiving? Does that really matter? And it's where I identify most opportunities in people's businesses is through that information. Because you're receiving at cost, you're marking it up to a retail and then through the course of time you're taking markdowns or you're doing coupon codes or whatever it takes to get that product out the door and really paying attention to where do we start, initial markup versus where are we going to end, maintain markup. And watching those numbers, we watch them very carefully because if, if we see something starting to slide in a particular category, you can address it very quickly. You can go back to it and say, okay, what's going on here? What do we need to, where do we need to take action when it comes to brands? I mean it is, it's lovely to carry some, some known brands and sometimes you want to throw, throw one or two in there. But you have to remember that most of those brands also have their own website where they sell direct to consumer. So can you get the margins that you want? Can you get the product that you want? From them or are they going to take it for themselves? So what I see most is in those brands you don't get the margin. You get a, you get their manufacturer's suggested retail and then a lot of times you do end up having to mark them down because they're so readily available to others. So really curating, again, curation, really curating a product, a product list that, that brings in some of those brands that are high quality, maybe lesser cost with some brands and, and building, building around that so that you can increase the margins over time versus having to mark things down and move them out.

Yeah. And really this is the science of your, your product assortment and really digging into that because I think sometimes carrying those well known brands, it's, it's an attraction, it can get people in your door. Right. It can give some validity to your business. But there is a cost benefit. Right. So you have to have that assortment with the other brands that you can really get margin on and mark up to, then mark down. So in talking about these reports, I, I want to talk about more reports and more things you should be analyzing. But let's just go back to the fact that a lot of people listening do use Shopify and they're probably on different plans within Shopify. So I know that you are a big believer in some apps. Can you talk to me about what Shopify apps you think everyone should have installed so that you can get access to better data?

Yeah. So okay, there's, there's several and this is a changing and evolving world too in the reporting. Some of the reporting is, is they're, they're changing their pricing structures and I've heard some of these things but really need to be able to get to real time inventory. And believe it or not, in Shopify you cannot get to real time inventory. So that requires a delirious profit which you can get to real time inventory. If you have multi locations though you can't get to retail, you can't get to that inventory by location. With Larry's profit, it's like $5 a month. It's, it's nominal. So really being able to make those comparisons like looking at sales and then looking at your inventory back and forth. Another one is better reports, better reports. I've heard their pricing structure is changing and is increasing. But there are a couple of products out there. I've really liked it because you can do a number of different things with it. First of all, you can get to real time inventory by location. They will create custom reports for you. So you can look at inventory, you can look at collection performance, you can look at tag performance, you can look at all of those different things that we need to have a good understanding of. It's not specifically addressed in planning, but going back and looking, okay, what was the value of the collection that I released last Thursday and what was my sell through and was it successful or not successful based on that? And that's where you can also look at margin to say, okay, maybe I didn't sell as much, but I made more money because I had a better margin in that collection than some of the collections I do. So it's really focusing on those data points.

Perfect. So I have to.

One more. I would be if I didn't mention Faves. I think it probably is probably one of the best and growing apps and it's, you know, it's got such a personal touch to it too with everybody seeing Oola around the hub. But that app allows you to track your orders and receiving by that category. And so management. Once gotten a really good relationship with Faves, we're actually getting ready to introduce a connection between the two with Shopify. So we can, we can do that planning piece automatically with, with those data points, but it allows you to really take the, take the picture and it helps you with things. Things in buying that can be really pro. Problematic, like buying too many of the same thing. We go for spring and we buy three yellow dresses instead of just so it's. It really does help with all of those data points. The other data points that you need to follow in order to plan the how much did I buy, when am I expecting it and when did I receive it? Yeah, so those are, those are my, those are my favorites. There's, there's quite a few out there. I know there's lots. People stay focused around marketing and sales, but boy, you can't, you can't be successful at marketing and sales unless you have a good handle on your inventory.

Amen. And we'll link all those up in the show notes, you guys. So if you're listening, you can grab them all right there as well. Have you ever woke up on a random Tuesday morning, Tuesday and wondered what am I going to post on social media today? Or man, I'm uninspired Or why are people not engaging with my content? Or I'm going to go live, but I feel like Ricky Bobby and I don't know what I'm going to do with my hands. Right. We all do. We all go through the burnout of social media that's why One of the most important products that we carry at the Boutique Hub is our Small Business Marketing Handbook. It's literally nearly a hundred pages of social media content and ideas you can use each and every day. We have everything from TikTok ideas to live sale ideas to monthly promotions and games and events. You can host daily social media content by month and by theme, engagement, questions and holidays and promotions. Plus, if you're buying and promoting in collections in your business, we break down what collections you should be not only buying, but also promoting month by month. Everything you could need for a new social media idea is in the handbook. So I've got it linked up for you in the show notes. It is the Boutique Hubs Small Business Marketing Handbook. I hope you snag one. It is a digital download. Print it yourself or as a member of the hub, use your Vistaprint discount to get it printed on the cheap and have it mailed directly to you. I hope you enjoy it. I hope you love it. It sits on my desk. I use it every single day. I hope you will too. One thing that you mentioned, you know, we sounded the alarms that one of the biggest things is knowing your categories, right, Your product types. But you kind of passed through this a little bit quickly and I want to make sure we pause and everyone else understood this, this. But the other like most important thing that I'm often shocked that boutique owners don't have a handle on is like you said, receiving. And, and just again to emphasize that's where faves comes in. It's really, really tough to do business by going to market or buying online and then having no idea what you bought, how much you bought when it's coming. And you all of a sudden are just surprised with some random boxes that showed up at the door and you're like, oh, okay, well here's my new arrivals this week. But then none of your new arrivals really work with one another. You can't really build collections or outfits out of those or vignette if you're a home decor store or gift store. So really knowing and tracking receiving is critical.

You, you have to capture what you have on order. And so a lot of this is put on the back burner because it's like I just don't have time to chase all of this information. And you don't have time until you have of your, your fall sweaters that you were expecting in September show up in January and, and then you got a problem because it's like they're either a markdown or you have to, God forbid, pack them away for six months so you've got cash stored in your, in your back room. So that really I, the way I always think about orders is they're your future payables and you've got to be adamant about tracking them because you will forget one, I promise. Like, you're busy, you're a busy person and the businesses are growing and you'll forget something and it will change your business. I mean, you can really put yourself out business by not tracking orders. I had, I've told this story a million times, but I had a client that had gone to January market, January Christmas market in Atlanta, and had bought all the Christmas things and she didn't track her orders and she ended up getting a box of 300 pairs of Christmas socks on the 23rd of December. And it's like you have to know that those are coming. She forgot about them. And so now you have, you have a markdown at best. But how, what are you going to do with 300 pairs of Christmas socks on the 23rd of December? And we have to think about our seasons like that too. Like in tracking seasons, like right now, if you're not following up on all of your orders that you've had at the fall markets, boy, you're going to end up with a situation you need to have again. Go back to that relationship and know what you've ordered, make sure. And if you always track it, then you don't have to worry if you forgot something. So I can't speak enough about tracking orders and knowing what you're expecting and when you're going to expect it. It's just not, it's not something you can leave on the table. It's too important.

Love that. I'm glad we covered that. It's so, it's often overlooked and so I just can't.

Yeah, I've heard it a couple of times recently. I'm like, so what do you like? I'm showing in your reporting that you have X amount still on order. What, what is that? And when is it really coming? And, and when you're at almost December 1st and you're looking at what, what could potentially show up before Christmas. Boy, I think about the lady with a 300 pairs of socks. Yeah, it's too painful.

Yeah, I, I'm gonna shamelessly plug Hub and Tori. This is why I'm so proud of our Shopify connection. Because when you buy it automatically will sync as a draft product in Shopify for you. And you have on order boards that will show you with pictures of exactly what you bought and when it's arriving. And we'll, we can arrange your boards like into collections as you're planning on these things coming in. And it syncs with faves so it will automatically sync into your open to buy planning as well.

I think there's a theme here of thinking like speaking these, you know, management take a lot of time and development money and Hubventory certainly has in being able to, to work with this platform that's constantly changing. But it's so important to have that succinct, that succinct data flow.

Yes. All right, let's talk Mary, about going back to our original conversation of we're sounding the alarms in 2024. You know, ordering less isn't an option. Just going pre order or drop ship only also not a good option, you know, for a number of reasons which we don't have to dive into. So if I am planning my inventory for 2024 can, and I don't know how to use any type of open to buy. I'm, I'm new to this. Can you please explain to me like what is open to buy planning or merchandise planning? How do you get started with it? And then we can get into the details of like what does management one do versus just planning it on a spreadsheet? Because those are kind of two different things as well.

They really are. So okay, so planning goes back to we look at sales, we look at markdowns, we look at inventory at retail, we look at what's on order and what you've received and when it was received. So those are the data points that need to be looked at. We look at it by category. The reason why we look at it by category, category, product type, we call it classification. Pick whatever terminology you want to use. You've got to break it down so that you have some data points to look at. Tops is one of those. It's, it's near and dear to my heart because we sell about three tops to every pair of bottoms. And if you think about how people shop, that's the way you break down your categories to, in order to plan. So we want to look at, we want to look at a breakdown that makes sense in the way that you buy and it's typically in the way your people shop as well. We don't want to do it by vendor because vendors like what happens when the vendor doesn't have it available. Guess what? You still need denim even though Judy Blue doesn't have a darn thing to ship to you right now. So you got to break it down by category instead of by vendor. So that's the other piece of it as far as. As far as planning is concerned. I think I mentioned earlier that you have to look at things by more by trend than by last year. So you want to look at things over the course of several months. That's the way we plan. We plan with an artificial intelligence component. It sounds really scary now. It didn't a couple of years ago. But the artificial intelligence component can pick up on trends that we might not see with the naked eye. So as denim was starting to trend, we saw some things happening with planning. Right now, dresses are starting to soften just a little bit. Part of it's the season, part of it's just the general category. So it'll pick up on those things and say, okay, maybe we need to not be so aggressive about our growth here or maybe we need to tone it back just a little bit. Okay, so we've covered what we look, the data points, how to break down the classifications. What do we do with it? We create an open to buy. And you can. Creating an open to buy is so stinking important because you can't really talk about open to buy without talking about a turn rate night. And most people get confused by this. But you have to talk about how fast am I moving the merchandise. And in women's apparel, you got to move it fast. And we know that it's got to come in, it's got to have its moment, and then it's got to go out quickly. So having an opened up buy plan has to be based on a turn rate. And women's apparel, just generally speaking, the magical turn rate is a 5, which is turning your inventory five times a year. So that with that being said, it's. It can be faster, it can be slower. If it's too fast, that can be. That can be a missed opportunity. If it's too slow, you're not keeping your money moving quickly enough. So really getting down to how much inventory do I have? When did I get it in? When does it need to be gone by Ashley? I could go like, I can keep going deeper and deeper if you want me to. You know, I could talk about this all day long. I.

So I just want to pause for one second and just highlight something that you mentioned. So you. You briefly talked about your AI I think this is really cool and I don't think a lot of people know this, that you guys do this. So when you talk about your AI, As I understand it, it is a tool that is looking at all the stores. So thousands of stores.

Yep.

And it's saying, okay, what is trending in all these different stores? Like what is the data telling us? But then it's saying, okay now specifically in your region. Correct. Like how does this impact you and how does this change? So we aren't, we're not comparing apples to oranges, but apples to apples.

Right.

And then you're getting the information, but then you, a human is backing it up because you have a relationship with a store owner you're working with and you're saying, okay, here's what the data tells us, here's what the AI also tells us us. Then here's how we maybe like pare it back or change it just a little bit so you feel good about it. And then you have a plan so that when you go to order online or you go to market, you know exactly how much to buy in what category. And you also know, because I think the plan tells you this as well, what to mark down and when it not specifically.

So we track a freshness rate. So we look at what percentage of inventory was received in a given time and we know that we want to turn it. If we know we want to get five turns out of it, we've got 10 weeks to sell it. So we take 52 weeks divided by five and that's 10.4 just for reference and that's a five turn rate. So if we know it has to be out the door in 10 weeks, why do we know it has to be out the door again? Consumer studies. This is a Paul Erickson chunk of goodness. So we know we have to move it quickly and our customers will come in with the same frequency as our new product arrives. So they're coming to see what's new. Nobody shows up at a store and says what old do you have? They want to see what's new. So keeping that flowing. And we know that most shoppers come within that, twice within that eight week time period. So if, if it gets to the 10 weeks, it really is what I call a brown banana. It's you've got expired goods and we have to think about our product that way. We just have to, it's the necessary of it. Two other, two other little statistics I want, I want to throw out there. 90% of what you sell, 90% of what you sell is going to happen within the first 10 weeks of receiving it. 50% of what you sell is going to happen within the first four weeks of receiving it. So you got it. If you take that to heart now, an online business moves a little bit faster. I will, I will say that I'm talking traditional brick and mortar online business is going to move. They're, they're more on a four to six week turn versus an eight to ten. So, but when you talk about planning, you have to understand that it has to come in, it has a start and a stop date. It comes in, you receive it, it has its period of time to sell. You've got to take the markdown. If you're buying in the right increments, you're only taking the markdowns on like the last two extra smalls or extra large or that one color that just didn't go over as well. So that's the other piece of this is really buying the right amounts and digging into your profitability so that you can, can really hone in on your best opportunities.

Yeah. So I, I again I'm going to pause and highlight this because I, I'm not a numbers person, Mary. This business has made me a number person. But I just want to like empathize with those who are listening and they're like, I'm a little overwhelmed still. So just know like, you're my people. That's you. So what I hear you say is we have to first have a handle on classifications on receiving. We have to know what's coming in when we have to have the right initial markup. We have to know that we're building profitability and markdowns into our markup. So price a little bit higher. Right. We have to have the right amount of inventory planned. We're buying it to keep it fresh, to handle this turn cycle. But then on the back side, we also have to have a strategy for our markdown. Correct?

Correct.

And so can you talk about that a little bit? I know, I, I Cheryl Crow analogy. Right. The first cut is the deepest. You got to mark that thing down deep and fast.

Well, you've got to factor in the element of time to a markdown. So we call it death by price tag. I used to carry around a picture of it and it was a pair of jeans that I bought. It had been on the rack clearly for a year. And they marked them down 15% and then 20% and then 25 and then, and then you mark it, turn the tag over and it's still going down. And then it finally gets to the price point where somebody's going to buy it. And then, and consumer studies again. Show that markdown that's going to get it sold quickly is between 40 and 50%. I usually go for 50 because it's easy math, you guys. And Ashley, let me not fool you. If you would have told my seventh grade math teacher that I have anything to do with numbers, he would laugh you into next week because they weren't sure I was going to make it out of algebra. So turned out trigonometry was more of a problem. But, but, but I was not. I was not born to be a numbers person, but I always liked money. And so I think if we can we say know your numbers. Know your numbers. But really it's know your money. Like, what's, what's in the bank? Why is it there? How do we get more there? And we all like anybody who goes into retail. We all like fashion. Like, if we're in women's apparel, we like fashion. But we also, like, we, we didn't go into business to not make money and not pay ourselves. So that's the other part that's like, okay, we can look at the, we can look at the dollars and make sense of our numbers. Dollars and cents is the easiest way to think about it. So don't get daunted by the fact that you don't understand numbers, because I can make anybody understand numbers by understanding money.

So good. All right, so markdown strategy critical.

I'm sorry. I got totally off track again. Start in a stop date. So it comes in it. It lives for a period of time. It gets marked down. You're marking down, hopefully that just the periphery of what you have left. Like, it's just a few items. If you have something come in and you know it's not working, you. You bought it. It's not the material you thought it was going to be. It doesn't hang right. Something's funny about it. It's not working. You get two, three weeks and you haven't sold the first piece. Take quick action on it. Take that quick action. But, but I, what I always encourage people to do with a markdown strategy is, is know when you, when it came in, first of all, you paid for it or when you're getting ready to introduce it. And make sure that that time frame, it's tight because I know we're trying to put collections together, but from when it comes to when it's, when it introduced, your money's sitting there. So it's got to have a start. That start date, the start date is really when you paid for it. It. The stop date. Is when it expires. So it's that eight to 10 weeks typically. So I usually suggest a markdown at about eight weeks at 50% to just move through, get your cash out of whatever it is that's left, and move on to the next thing. The great thing about this is people, people get caught and oh my gosh, I'm going to mark it down to cost or, you know, a little less than cost. If you're buying right in the right increments, all you're marking down is, is the little bitty leftover. So if you look at it as a pack or a two packs or whatever the item, however the item performed, you're taking a hit on a couple of pieces, which really, in the scheme of things just doesn't. It doesn't hurt. And it just needs to be done and get it out of the way so that you have that fresh look to your store.

In retail bootcamp, we use this and it's just, I think it's a easy analogy to visualize, but we call it, and Sarah Burks calls it the rule of thirds. So if you think about, you know, you've got two smalls, two mediums, two larges coming in, a third of it, you're going to sell, you know, immediately at full price. A third of it you might sell with a coupon code or some like, you know, you restyled it or you gave it a little extra time and emphasis. And third of it, you're probably going to sell at 50% off. You're going to just slash it at wholesale and move it out. And I think it's important to keep that in mind. The goal is not 100% sell through at 100 markup. That's not realistic.

You are, you're missing opportunities and you're likely frustrating your customers because they're coming in looking for a medium and you already sold them all out. So that brings up the wider versus deeper too, which is a big conversation right now. And I'm going to use the word curate again, because I don't. I guess I'm stuck on it. And I'm glad it's not pivot, because I hate that word.

Over that word.

I'm so over pivot. But cure. But what you're doing is you're curating for your customers. And when you spend all that time and effort to curate a collection and then your people show up and you're sold out of everything in a size medium or every pair of size 29 jeans, you're wasting your efforts. So again, it goes back to how much of my budget am I going to spend and how wide do I need to go versus how deep do I need to go? Well, I need to go deep enough that I'm not having 100% sell through, which is like, to most people is just absurd. But. But you have to go deep enough that you're not. That you're able to build your clientele. Every time I show up to a store, they don't have my side, I'm going to quit going there. Like, I'm going to quit. So that's the other piece of this that has to be talked about and is so important is the wider versus deeper. I think kind of if you go too wide, you're setting yourself up to look messy and you're setting yourself up to disappoint people.

That's so important. I'm glad that you brought that up because I know in the live sale community, specifically like that was a big issue for a long time of there's missed opportunity here if we're 100% selling through everything.

But they're not growing. You got to grow. You got to grow your business too. So whether it's live selling, online selling, or you're looking to grow, you're looking to grow your customer follow and can't do that without having product available. So it, it just is the reality of it.

So one more thing I want to hit on kind of on this topic and I know I'm laughing, Mary, because I told you. Oh, oh. We'll talk for like 25 minutes. Okay, sorry. Time check. If you have to listen to this podcast in two chunks, do it because it's all important. So we talked about markdowns. I just want to again emphasize we can restyle, we can reshoot, we can repost, we can relaunch something as a new arrival. There's a number of things to do and then you can take that big 50% off markdown. So put in the effort first and, and ask yourself, how many times did I actually post this product online? If it was one time at 9am in a Facebook story on a. A Tuesday, nobody saw it. So you're gonna have to put some effort in to make sure every product gets publicized a few times. Right? Like the rule of sevens, you've got to see some something 7 times or posted 7 times for people to take action. So I just want to make sure. Something you said way back at the beginning, I want to tie this together, is those Shopify apps you mentioned, the critical Nature of those Shopify apps is because Shopify cannot give you real time inventory on hand. And the, the real issue so many boutiques are having right now is they have so much extra inventory, they actually have no idea how much inventory they have on hand. No clue. And they're stuck because all their cash is tied up in old inventory. But they know freshness sells, but they don't have the money to bring in fresh inventory. So then they're going to Shopify capital and pay by capital and stripe capital, which I just think I'm going to say the term predatory lending. No shame. If you use it, it can be a great tool, but it can flip you upside down so fast and you're paying 30 interest and you're like, what just happened? If you're not super careful. So again, it works, but use with extreme caution. So I, I could name hundreds of stores that are in this very scenario today, and I know you could, too. So can we just reverse engineer this for them real quick? If you're stuck with all this inventory and you're upside down and you can't bring anything new in, Mary, where do you start?

Well, the first thing you have to do is not be embarrassed because a lot of, like, I don't really want to talk about my position. It's got to be the worst thing you've ever seen. And I can assure you it's not.

You're not alone.

So you are not alone. And don't, like I always say, don't. Don't look in the rearview mirror. Look out the windshield. And that's that. That comes from a pastor that some people like and some people don't. But, but where you're going is so much more important than where you've been. So let's.

It also comes from jelly roll on the CMA Awards.

Okay? It's just, it's so important to not be embarrassed by your situation, but to address it quickly. Once you realize you're in a. You're in a situation, you've got to do something with it quickly. So the first thing you do is you say, okay, what is older than that? Eight to ten weeks. Okay? And you may need to back it up to 12 weeks or even six months and have the biggest sale of your life.

Life.

And, and have fun with it. And when people say, are you going out of business? You say, no, I'm making room for all of the new goods I'm getting ready to bring in. But you, you have to mark down and you have to get out of those Old goods, they still have value. You just have to remember that it's no longer a margin value, it's a cash value. So it's not what you paid for, it's what you can sell it for. And you have to not be ashamed of that. You just have to say, okay, I got myself a. Into this position and now I'm going to get myself out of it. And so let's take action then. If you don't have a product category structure in place, you have to have that, like, do your product category structure. You have no money. You're going to have to find where your value is. I do. I. The Shopify loans. There's Shopify. There's all kinds of them out there. They make me really, really nervous. If you're interested, if you're in a situation where that's your only option, start using your resources around the hub. And again, feel free to reach out. I can talk you through, like, what action to take and how. How quickly you need to move. But. But you can't. You can't stay in that position or you will. You will work yourself right out of business.

Yeah. So I. I love all that. Mary. No shame. You are not alone. We can move that old inventory in a number of creative ways, and you can negotiate your way out of some of those crazy interest rates. And now is the best time to have a relationship with a real banker. If you possibly can. Find a community bank, find a credit union, find somebody who can help you so you're not stuck and tied to basically garnishing your wages with every sale that comes into Shopify.

Yeah.

So good. Okay, Mary, I know we've. We've got to wrap this up. We could go on one. I'm just going to put in a plug A. All of your contact information will be in the show notes. You work with management. 1. Everyone can reach out. We've got a special program where you guys can work with stores of all sizes, but you can obviously reach out, learn if it's right for you. If not, Mary's in the hub every day. And even better, Mary comes to all the shows. So I see you in Dallas.

Yes.

You're always in our showroom. People can come in, visit with you, have their questions answered. Answered. So come by our showroom. It is literally there for this purpose to make you feel comfortable having the sometimes uncomfortable conversations. Right.

Yep. I've got kind of three things I want to say, if you don't mind.

Yeah.

And I made some notes. I woke up this morning thinking about this. First of all, have confidence in yourself. There's a reason why you're in this business. There's a reason why people have looked to you. There's, there's a reason why you're here. You have a problem, purpose, take a deep breath and be you. It's, it's so important because you is what makes your business. Don't second guess yourself. Use data driven decisions to make decisions. Don't second guess yourself. Second guessing turns into a spin. And then Ashley and I have talked about this, but have faith. We're both, we're both big believers. But it's, you've got to, you've got to lean on some faith and you've got to lean on knowing that God always provides and that what you think about, you bring about. So if, if you're manifesting things that are, that are bad, that's what's going to happen. If you're opening your mind to the possibilities and, and the resources that are around you, you can make this all come together so nicely and have so much fun with it.

I love it. Mary, you're such a cheerleader for so many, so many members of our community and outside of our, our community. I'm just so thankful to be your friend and to get to do this journey with you like that is what lights me up, is just getting to see people's lives and businesses evolve along the way. So I'm just so blessed to have you in this corner.

I feel the same about you. I think we've talked about, we talked about one of those, one of those meetings that was probably, I don't know, I think we decided it was probably seven or eight years ago when we met and we've been on a fun journey together and, and, and Ashley, you've just grown such a great community. I did have a little note in here about community over competition too. And the community over competition is more about. It means helping others openly. And I think that's the way I've always approached the business piece of it. It takes time, but it doesn't mean profiting off of others in that, that whole piece of it. So it really means helping others openly. So keep that, keep that in mind as well.

So good. Mary, I have one last question for you.

Yes.

You don't, you can't get away from me or get off of this show without answering the final question, right? Yeah, everyone's got to answer the final question. So I frame this a lot of times with people. You know, you're 30 years down the road however many years down the road, you're on the front porch, you're at the beach, and I. A lot of times, I'll frame it with family. You're with your friends, your family, your grandkids, whatever. You, my friend, I love that you are a woman of independence. So you're surrounded by your friends, people that you've done this life with, you've done business with. When you look back at this journey you've been on and the lives you've touched and the business that you built and the businesses you've helped build for other people, what's the thing that you want people to remember most about you?

Oh, my gosh. You know, one of the things, it sits next to my desk. It says, work hard and stay humble. And I think my dad was that person. And when I think about my dad, I think about his humble nature in life. He's been gone for three years now, and I hope I'm remembered as just a cheerleader and somebody who really cares about others and wants to help them with their business. And I've focused my life that way. I think everybody, anybody who knows me knows I'm not married. I don't have any kids. That was what I wanted out of my life. It just didn't work out. So this is my life. I mean, my life is really about about this community and what I do and just enjoying the ride.

I love that. I think God gave you such purpose and gave you a whole different type of family. Thank you. And we get to be a part of your family now. So what a blessing that that's ended up being for so many of us. So, Mary, thank you for your just genuine spirit and for your giving nature and for the. The woman that you are Again, I'm so blessed to be on this ride with you. So thanks for spending your time with us today.

Great. We'll see you soon. Thanks so much.

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