- While economists, famed for not agreeing, still find other causes of concern and worry, this may mean that topics other than the economy can take over the "bad news makes news" coverage.
- And that, in turn, could buoy consumer confidence, and retail sales.
Retailers must be mindful of all this as they make their business and buying decisions throughout the year. But the macro economy is simply interesting, but not significant. Your local economy is, of course, what really matters.
In that context, every savvy owner uses these three steps.
We know, "plan" can be an intimidating word. But you're not trying to plan the future. You're simply identifying your destination.
- That means having a profit plan for the year, your budget, reflecting your assumptions about monthly sales, margins, and expenses.
- Plus, of course, your inventory buying (Open-to-Buy) plan: how much inventory to bring in, and when, to meet your sales plan?
This key step starts with revisiting your overall planning assumptions.
- Is the business environment in your market areas more or less upbeat than you anticipated?
- Are customers showing a willingness to spend on your merchandise quality and selection?
- Are new resources for buying merchandise offering more flexibility for you?
Next, of course, compare your Actual results to your Plans. No, don't focus solely on "How are sales?" Instead, check out in particular these three "big" numbers, the ones that are more manageable by you.
- Operating expenses
- Ending inventory levels
Step #3: Adjust
Given all that, what adjustments could you or should you make? Small ones are preferable. You have a destination and a road map from Step #1. The adjustments are adjusting to the conditions: Is it icy? Are there detours? Potholes to avoid?
Remember, these "adjustments" aren't to change your plan; that's what some folks call "moving the goalposts." Instead, you may need to adjust some of the purchasing decisions, or expense management, or promotional activities, etc, in order to adjust to the conditions.
Remember, our focus is on the controllable variables. And the macro-economy is NOT a controllable variable for any of us!
The key: Keep your perspective. And use the lead time.
* "What Recession? Some Economists See Chances of a Growth Rebound."Jeanna Smialek, The New York Times, Feb 9, 2023.