Staying Ahead in Price Drop Season
In mid-October, Kamran Tehrani, buyer for retail products at Video and Audio Center in Santa Monica and Lawndale, Calif., was planning to meet the price drop on that 50-inch Panasonic plasma in his store’s weekend advertising. Tehrani was working his manufacturer sources, asking for more advertising money, maybe even spif for the sales people and mark-down money to, as he says, “ease the pain” of the price cut.
Tehrani has been with Video and Audio Center for five years as a buyer, and he views forecasting as more of an art as a than a science. “You can go back and look at a history and look at how you did on certain product,” he says. “But it’s such a dynamic business, what worked last year may not work this year.”
Tehrani normally develops his forecasts about six months out. Using Video and Audio Center’s 12 months of sales data, he looks at what was sold at each price point and adds an additional percentage to account for volume for growth in the new year. Delivery of product is staged. When purchase orders are placed, “we normally schedule them to ship now, then in 30 days, 45 days and finally 90 days out,” says Tehrani. “We go into this scheduling mode normally right around September through December. For the balance of the year we usually send in purchase orders now unless the merchandise is a hot piece that might be allocated and scarce. In that case I schedule it out.”
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