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Don’t Over Buy Or Over Commit

During tough economic times every business is under pressure to figure out ways to maintain their current sales and obviously find ways to increase sales. Many of us have just returned from the granddaddy of all shows, the ASD show in Las Vegas. The vendors exhibiting seemed upbeat and between the Sands and Mandalay Bay Convention Centers, there were thousands of these vendors to choose from. But if you spent any time talking beyond what products were being sold, you definitely felt the underlying current that business is very tough in our industry. 2 driving factors have the suppliers in the industry very concerned. First is their major accounts are slowing down how quickly they pay their bills; and second the average order size is down.

When you are in the closeout and inexpensive goods industry, a slow down in payments can be a death wish for companies on the bubble. Finding the right closeouts at the right price usually requires the right cash, and if the suppliers’ cash flow is interrupted because of a slowdown in payments coming in, they can’t close the deals that they once could when business was normal. This does have a snowball effect, because now stores aren’t going to be exposed to the same number of quality deals and it slows down the entire beat of the industry.

This in turn is one reason why the average sale was down for this show. Another reason is the slowdown in growth during January and February. Stores sell less during the first part of 2008 which clogs up open to buy and they have less to spend because the shelves do not need to be replenished at the same rate.

A third reason is we believe what we read and in today’s news of downturn and recession, we all get the jitters in how far out we are willing to step in when it comes to predicting the future.

So, is this spiral the industry is experiencing short term or long term? Our combined psychic will determine that for the long run, so to protect yourself in the short run, don’t over buy or over commit.

Marc Joseph
President
www.dollardays.com