By Ali Cudby
In preparation for the upcoming lingerie industry trade shows, Ellen Lewis and I have been discussing the art and science of buying for lingerie retail stores, and particularly specialty stores. In parts one and two of this lingerie buying series, we covered the basics of buying strategy and how open to buy works in a lingerie boutique. In this article, we will tackle the more complex area of SKU analysis.
Why is SKU analysis important? Well, understanding the flow of your inventory reveals when you are short-stocking pieces that could sell if you had them, thereby leaving money on the table. It also shows you when you are over-buying and spending too much money on inventory that sits around, gets marked down, and generally prevents you from buying other, more profitable, goods.
Let’s start with the basics – a SKU is an acronym for Stock Keeping Unit. It’s defined a distinct item offered for sale, differentiated from all other items offered for sale. In a lingerie store, a SKU would be an item identified by brand, style number or name, color and size – such as a Chantelle Rive Gauche 3 Part-Cup Underwire Bra (Ref 3281) in Black, size 32D. Another way of thinking about SKU is that it is uniquely identified by the number associated with a barcode.
In the earlier articles about Open to Buy, we talked about planning down to the category level – bras, bottoms, etc. SKU takes analysis to the next level. SKU analysis helps a lingerie business understand:
As you go through this analysis, take your vendor relationships into consideration. A brand rep will make recommendations and share industry averages, but it’s up to a store to know their specific customers and where they may deviate from industry norms. At the same time, a store might choose to stock this year’s fashion color from a vendor they already know and trust because of the importance of strategic partnerships with vendors and those relationships.
For an excellent example of the benefits of strategic partnership between vendor and retailer, download your free copy of 7 Steps to Boost Your Lingerie Business and check out Step 4, which is a great example of vendors and retailers working together – in this case, a study of the win-win relationship between Cosabella and Bella Intimates.
Planning your buying at the SKU level enables a deeper understanding of your sales, which means buying smarter, selling faster and making your lingerie business more profitable.