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January 2016

Apparel Markdown and

Clearance Planning

Association of Golf Merchandisers

Presented by: Leigha Main

AGM Education Team

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The Top 2 Questions Asked in Golf Retail, Perhaps all Retail are: •  What’s New?

•  When Does It Go On Sale?

•  Ensuring you have good, honest answers to these 2 questions could be the key to your retail success not only in 2016 but beyond

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Disciplined Markdown and Clearance Planning Will Drive Up Your Maintained Margin and Top Line Sales Key Benefits Of Good Markdown Planning:

Improve Your Ending Inventory Position

Improves trust with customers

Elevates Profile of Retail Business Drive Up Top Line Sales

Improve Maintained Margin

Markdown Planning

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Markdown Planning Is Among the Most Important Retail Disciplines For The Health Of Your Business

u  Markdown planning is an important part of ensuring your year end profit will be in dollars not all in inventory

u  Good markdown planning will help drive up maintained margin in fashion, seasonal based product

u  Proper markdown planning will help elevate the perception of your business in the eyes of your customers

u  Disciplined markdown planning will mitigate the need for deep discounting and extreme clearance efforts

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If You’ve Used Any Of These Statements YOU Might In the Way of Successful Markdown Planning for Your Shop u “I think my members are going to love what

I bought this season – I don’t think I’ll need to mark anything down this year”

u “We don’t do markdowns or have a sale section at our club, it’s a very high profile club, our members don’t care about price”

u “I’m going to wait and see how I do this year and then decide how I’ll markdown or clear if its necessary”

u “This collection was hardly touched I think I’ll just box it up for next year – It will look like new”

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Markdown Planning Should Be An Annual Task at the Beginning of Your Season with Some Up Keep Monthly

u  The most successful retailers know that planning your markdowns is as important a part of a successful retail business as planning your arrivals

u  I encourage you to plan the markdown trajectory of each delivery prior to it arriving to your shop ~ the same way you plan where its going visually, and your promotion to your members/staff you should plan its ‘life’ in its shop

u  Put aside 2 hours to catalog the arrivals for your largest receiving season (March, April, May for instance) and then add as you write additional orders in season

u  Example: 1.  Use an X to indicate

arrival 2.  Use a 1 with the date

1 (1/10) to indicate the 1st markdown

3.  Use a 2 with the date 2 (2/10) to indicate the 2nd markdown

4.  Use a C to plan the clearance

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There are a Number of Factors To Consider When Planning Your Markdown Schedule – Timing, Discount etc. u  Use your calendar, anticipated traffic etc. through the shop to determine the

amount of time a fashion group should stay at full price u In this example we determined 60 Days was the right amount of

time ~ an average member played 3 times per week meaning in 60 days they had seen the collection 27 times

u  Determine the number of markdowns you want your customers to see through the lifecycle of product in your shop u In this example we determined we would do 2 markdowns, the

first to 25% off, the 2nd to 50% off. Each level would be for 30 days

u  Determine the ‘end of life’ plan for for each fashion group u In this example we determined that ‘Clearance’ would move

every polo/short to $19.99 and it would remain there until cleared

No Fashion Item Should Celebrate a Birthday in Your Shop!

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Here is a Sample Markdown Plan – Built With In A Simple Excel Workbook u  Here is a sample excel workbook used to plan out apparel and footwear

markdowns for a traditional private club

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Healthy Margins Can and Will Be Achieved With A Good Markdown Plan Ø  One of the most common pieces of resistance I hear from a merchandiser, pro,

general manager etc. on their fears and concerns around markdown planning is that it will drive down their maintained margin ~ I feel strongly good markdown planning will do the opposite

Ø  Sample Maintained Margin Calculation:

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Sell Through Tracker: A Tool To Help Isolate Good Selling Sizes, Silhouettes etc. Ø  Consider using a sell through tracker to help isolate top selling sizes, silhouettes etc. Ø  This simple too can operate as a good companion piece to your POS reporting and/or

to augment any short comings you POS might have on sell through reports

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Visual Ideas to Drive Traffic and Move Through Product Quickly Ø  Mark each tag with the ‘new’ price vs. just a % off sign Ø  Ideally in red pen, a colored sticker to help make it easy for a customer to identify

value Ø  Do the math and be specific ~ there is great benefit to marking a tag with ‘ Was $80,

25% off now $37.50’ vs. simply hanging a sign that says ’25% off’ in the section Ø  Sign your markdown section to drive traffic – could include window markers for glass,

painted boxes and/or wood sale letters

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End of Season Clearance Is a Healthy, Necessary Step To Clear Unsold Fashion Merchandise Ø  A ‘Clearance’ Sale should be an annual calendar event to liquidate any unsold

markdowns, merchandise Ø  This should be the last step prior to writing off/donating to charity Ø  It could include a member/customer and/or Friends & Family sale where all items,

regardless of cost are a blanket price $19.99 Ø  It should include visual change similar to the hanger tags below to help drive the

visual message Ø  It should include as wide a net as you can cast ~ members, staff, family of staff,

community members etc.

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There are 4 Key Ways To Improve Margin In 2016

Ø  Adding assortment in long margin categories such as junior apparel

Ø  Adding in long margin, season-less categories like t-shirts, sweatshirts etc.

Ø  Modifying the balance between fashion goods and core/essential goods to more essential items you carry over year to year vs. just for a season

Ø  Augmenting you buy to earn better embroidery costing, off invoice volume discounting, rebates

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Improving Margin in 2016 – Adding/Augmenting Your Junior Assortment Ø  Junior golf apparel to include ‘playing age’ juniors (5 years old & up) as well as new

babies being born into the club are both significant sales and margin opportunities Ø  These items should all have long retail lifecycles in your shop (1+ years) simply

needing to be counted and filled in vs. in season markdowns Ø  The ‘season-less’ nature of these goods should enhance margin

Tavistock Country Club Cherry Hill Club Deer Ridge Golf Club

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Consider Adding More Season-Less Product To Your Apparel Assortment Ø  T-shirts, sweatshirts, casual cottons aren’t season specific so can be a part of your

full priced assortment all year long Ø  Items in this category, similar to things like hats and accessories bare more initial

mark-up than polo’s, shorts etc. and are hard to benchmark off course

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Modifying Your Assortment to Include More Essential Items Ø  Most shops offer good essential polo options for men and often women, considering

augmenting that to include an ‘essential’ ¼ Zip for men, vest for women, bottoms program for men & women etc.

Ø  Key things to ask a vendor when choosing Ø  Expected length of time with that sku – aim for styles that will be in

the line 18+ months Ø  Low Cost/No Cost embroidery – Ideally you would earn n/c low cost

embroidery without any out of line embroidery levels to earn the n/c embroidery

Ø  Look for fashion and core colors – you’ll want an assortment that include colors other than navy, black and white

Ø  Look to choose styles/brands that will help you with a full size run S – 3 XL for men and XS/S – 2XL for women would be ideal

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Plan and Communicate Will Equal Success in 2016

Ø  Build a Markdown and Clearance Plan With Your Team for 2016 Ø  Similar to any change planning, early before the season starts, will

help ensure success Ø  Communicate your plan clearly to all staff members and management

Ø  This will hold everyone accountable and help make sure everyone is bought into the sample goal and process

Ø  Consider a new tracking strategy to support your event Ø  Try using the sell through tracker for all women’s fashion in 2016 or

add in a Friends & Family event at the end of your season Ø  Remember no one cares what you paid for it but you

Ø  Sometimes things sell better than we thought, sometimes they don’t ~ don’t ‘hold on’ to goods that are selling well or not

Ø  Be transparent with your customers on markdown and clearance activities Ø  Build and practice language for communicating your markdowns to

your customers the same way you do product knowledge buzz words

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Thank You To My Fellow AGM Members!

Thank you to all of you and special Thank You to Desane Blaney who has been a friend and mentor to me since joining the AGM 15 years ago. I’ve been lucky to do a number of different thing in golf retail

in the last nearly 20 years – participating in the AGM is the single most important thing I’ve done to

continue to grow and learn. Email me: leigha.retail@gmail.com

Call me: 610-247-9809 Follow me @LeighaMain

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The Educational Voice in Golf Merchandising Since 1989

Association of Golf Merchandisers PO Box 7247 – Phoenix, AZ 85011-7247

www.agmgolf.org – info@agmgolf.org

Phone: 602-604-8250 – Fax: 602-604-8251