Six Month Buy Plan
Nordstrom Fall 2023
Nordstrom Fall 2023
The Ask
The goal of this project was to create and simulate a retail buying plan for Nordstrom for the fall 2023 season with the competition of Neiman Marcus. This included projecting sales, managing stock levels, setting markdown percentages, and ensuring profitability through careful planning. The plan had to account for both economic conditions and the retailer's strategy to improve turnover, sales, and gross margin.
The Process
To build the buying plan, we focused on several key areas. First, we analyzed the economic environment, especially the risks posed by inflation, and how it could influence consumer behavior. We adjusted our strategies accordingly, recognizing the importance of adapting to changing sales trends and the broader economy. The sales strategies we proposed included shifting focus away from underperforming departments and aligning with customers' disposable income levels, which directly influence their purchasing decisions.
We also evaluated Nordstrom's target market and its key customer segments, particularly affluent shoppers aged 35-44 and 18-34. These consumers are known for their preference for premium brands and an omnichannel shopping experience. This guided our product recommendations and inventory planning.
MY WORK
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MY WORK ⋆
We started by analyzing last year’s sales data (LY) and projecting this year’s sales (TY), focusing on a slight increase in sales overall for the season, with a 2.5% increase over LY. This was in line with projected market trends, including a 1.96% growth in the apparel market for 2024. We adjusted the monthly sales plan based on historical sales patterns, factoring in consumer behavior influenced by inflation and economic conditions, which led to some months showing a decrease in sales projections, particularly in December and January.
Next, we carefully planned the stock-to-sales ratios (s/s ratio), ensuring that inventory levels were aligned with the expected sales trends. This led to an increase in the stock levels for most months, with a decrease in December as sales were forecasted to slow down due to post-holiday adjustments.
Markdowns were another crucial part of the plan, with a 3.1% increase in markdowns compared to last year, particularly in November and December, to help clear inventory and boost sales during key retail periods. This increase in markdowns helped us improve turnover and better manage open-to-buy.
The purchases plan was developed to ensure we had sufficient stock to meet sales and markdown needs, and we projected total purchases of $206.3 million, an increase from last year’s $196 million.
Finally, we justified the sales and markdown strategy based on external research, including consumer behavior studies, market trends, and economic forecasts, ensuring that our strategy would drive growth while managing risks associated with inflation and supply chain constraints.
SKILLS
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SKILLS ⋆
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Developing accurate sales projections based on historical data, market trends, and economic conditions.
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Understanding how markdowns impact inventory turnover and profitability, and setting realistic markdown percentages.
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Learning how to create a detailed buying plan, balancing sales goals, stock levels, and markdowns.
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Calculating required purchases based on sales plans, stock levels, and markdown projections.
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Understanding how markup and markdowns affect overall profitability and gross margin.
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Analyzing sales, inventory, and financial data to inform strategic decisions.
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Aligning buying strategies with broader retail goals, including improving turnover and gross margin.
Outcome
Reflecting on the outcome, I feel confident in the buying plan we developed for Nordstrom. The most challenging aspect was projecting accurate sales amidst economic uncertainties, but by analyzing historical data, market trends, and adjusting for inflation, we were able to craft a solid strategy. I’m particularly proud of how we balanced increased purchases with a realistic markdown strategy to drive profitability, especially during key months like November. The project gave me valuable insight into how retail buying works in practice, particularly how to manage inventory, forecast sales, and ensure profitability. Overall, this experience deepened my understanding of the buying process and has better prepared me for future strategic roles in the retail industry.