Essay on Marketing Plan For A Retail Company

Essay on Marketing Plan For A Retail Company

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In order for a retail company, like Zara to produce good sales results it is dependent on the level of stock on hand. If Zara has too much inventory in a given store it can slow the stores cash flow as well as reduce profit due to markdowns. Therefore, excellent inventory control is of high importance to Zara in order to realize sales targets. Studying the open-to-buy has allowed me to realize it’s tremendous importance as well as usefulness for a buyer. As one of the two major tools of merchandise planning, the open-to-buy plan is used by many retailers today as an inventory management tool, in order to determine the quantity of inventory that needs to be bought. This is generally done on a monthly basis in order to reach revenue projections. It is therefore a control tool to see if the purchasing done by the buyers is done according to the six month merchandising plan. This will avoid over purchasing a certain product, which would then have to be marked down to be sold. In addition, the buyer has the ability to see the balance of purchases remaining in units or dollars for a given time period. But at retail the OTB is mostly calculated in dollar value, because sales are made at dollar value.

In simplistic terms the OTB is calculated by subtracting the merchandise available from the the merchandise needed. The merchandise available comprises of inventory on hand and the merchandise on order. While the merchandise needed consist of planned sales, end of month inventory and planned stock. If a Zara buyer has OTB it means that his or her merchandise need is greater than his or her merchandise available. If it is the reverse, whereby the buyer has overbought and therefore has more merchandise available then it needs the Zara buyer ...

... middle of paper ...

...le to make yourself more effective and efficient in the organization.

In sum understand the OTB has taught me that a Zara buyer can be more successful if they utilize the plan well, because there is an opportunity to increase the profit levels. Therefore, as an aspiring buyer for fast fashion this has taught me that the OTB is an extremely resourceful tool in optimizing and controlling inventory which in turn leads to my performance as a buyer as well as overall company performance. Which in turn may lead to a faster career track within a company. Having the OTB tool available will help you to avoid buying too much of a product. But even if you make a mistake the buyer has six different ways in which it can attempt to increase the OTB. A buyer however must not forget to keep some OTB dollars. All in all, I believe that learning about the OTB is extremely valuable.

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