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David Brown

How to Make The Most of Your Department Reports

Allocating the appropriate time, money and space to each department is critical to success.

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DEPENDING ON THE TYPE of business you run, chances are your sales will be coming from perhaps 30 or 40 different departments across your store. Some, such as bridal, are more obvious. Others, such as silver earrings, may not make a big difference — yet it’s important to understand the contribution from each department and where it fits into the overall performance of your store.

A department report in order of sales will reveal the biggest contributors, and it should come as no surprise to know that the top 5 or 6 departments might be contributing 50 percent or more of your storewide sales. What might surprise you is which departments make up the top 5 or 6. Take a guess now and then compare it to your actual results; chances are you’ll see at least one department that wasn’t in your estimate.

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Knowing this will enable you to allocate your resources towards these areas. These resources are, in no order of importance:

1. Time
2. Money
3. Space

Time refers to the energy you and your staff devote, both physically and mentally, to this area of your business. You might have a love of watches and enjoy spending time checking out the latest models available, but if watches represent 3 percent of your sales, this category doesn’t warrant a lot of effort.

Money will predominantly be spent on two fronts: one is your inventory, while the other is marketing. Is the inventory you carry in each department relevant to that department’s contribution to your sales and profitability? If not, consider reallocating it. Are you running ads for an area of your business that is neither a significant contributor to sales or profit? Do you allocate your marketing spend by area based on what product you are advertising? It’s not unusual to find a business spending 90 percent of its marketing on diamonds when that category represents only 30 percent of sales.

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Space refers to how you allocate the merchandise within your store. Are your best sellers front and center? If your store is 50 percent bridal, does your merchandising say this when your customers walk into your store?

Review your departmental contribution and determine how you are allocating your resources of time, money and space across each area. Make a decision to rebalance each area as required so it more closely aligns to your store’s performance. The exception to this is if you are hoping to grow a particular area, in which case your resources should align with your anticipated results and performance.

David Brown is president of the Edge Retail Academy, a force in jewelry industry business consulting, sell-through data and vendor solutions. David and his team are dedicated to providing business owners with information and strategies to improve sales and profits. Reach him at [email protected]

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