Archives for July 2011


What’s Your Meatball?

Hey there!

I hope I didn’t throw you off but seriously… what is your meatball? :)

There is a saying out there (i.e. Pareto Principle) that states that 80% of your business comes from 20% of your inventory.  Here at Retail Recipes, we have a similar principle that I like to call my “Meatball Theory.” This theory can be broken down into 60/20/20 principle and here’s how.

Every business needs a meatball, a “no-brainer” part of the business that generates consistent and reliable sales. This type of inventory are products that have proven selling and without much effort, accounting for about 60% of your business.  The next 40% of your inventory can be divided into two categories: opportunity products (i.e. merchandise that has the opportunity to become these “no-brainers”) account for 20% and the remaining 20% become your test products (i.e. icing on the cake).

While it’s great to have some reliable merchandise, I am constantly looking for opportunity vendors.  I also search for items that may not sell as well as my “no-brainers” but can excite my customers and peak their curiosity.  A balance of these three categories will keep the customers coming back. While there are certain pieces that you know will consistently sell, you never know what the next “hot” item will be.  As you introduce new items and get selling feedback, you will start to become more confident with what your customers are looking for and start to rock and roll with your business.

So here is your assignment for this week.

Take a look at your own collection and figure out which items fit into which category. It will help you organize your collection and create a merchandise assortment that will be pleasing to the retail buyer and ultimately the customer.  If you are hitting a wall and need some help with your merchandise strategy, click here to schedule a private one-on-one session.


Grace Kang
Your Retail Product Mentor


Can you talk the “retail” talk

retail recipes

Finding something to distinguish yourself from your competitors is one of the hardest parts of getting “in” with a store.  Having the right product and image is hugely important; however, so is being able to effectively communicate your product idea to a retailer.  As I mentioned last week, having a great story to tell is extremely important to becoming a memorable brand.  But here’s the secret….

Once you get the store owner or buyer’s attention, you can get them to notice you in a different light if you can talk the “retail” talk.  Using the right language while communicating can further elevate you in the eyes of a retailer. Being able to use the retail lingo, naturally and seamlessly of course, shows a level of professionalism and experience that will make YOU stand out from the crowd.  

Even if you’re just starting out, use the list I’ve provided below as a jumping off point and take the time to do your homework. Or if you’ve already been around the retail block a few times, flaunt it! Having an understanding of the business is priceless to a retailer because it will make working with you that much easier. Being able to walk the walk and talk the talk (even if you’re self-taught :), will help you enormously on your quest for retail success. 

This is the store buyer’s “Bible” in managing his or her business.  Open-to-Buy refers to the merchandise budgeted for purchase during the course of period that has not yet been ordered.  The amount will change in relation to the business trend (i.e. if the current business is trending better than plan, a buyer may have more “Open-to-Buy” to spend and vice versa.)

Sell Thru %
Sell Thru % is the calculation of the number of units sold to the customer in relation to what the store received from the vendor. 
For example: If the store ordered 12 units of the hand-knitted baby rattles and sold 10 units last week, the sell thru % is 83.3%.  The percentage is calculated as follows:
(sold units/ordered units) x 100 = sell thru %
(10/12) x100 = 83.3% 
That’s a GREAT sell thru!  Actually too good… means that we probably could have sold more. 

The On-hand is the number of units that the store has “in-stock” (i.e. inventory) of a certain merchandise.  Using the previous example, we now have 2 on-hand (12 minus 10).

Weeks of Supply (WOS)
Once you calculate the sell thru % for your selling items, you want to calculate your WOS on your best selling items.  Weeks of Supply is a figure that is calculated to show how many weeks of supply you currently own, given the average selling rate. Using the example above, the formula goes like this:
current on-hand/average sales = WOS
Let’s say that the average sales for this item (from the last 4 weeks) is 6, you would calculate your WOS as:
2/6 = .33 week  This number is telling us that we don’t even have 1 full week of supply left in this item.  This is telling us that we need to REORDER fast! :)

Purchase Markup % (PMU)
Purchase Markup % is the calculation of the retailer’s markup (profit) for every item purchased for the store.  The formula goes like this:
(Retail price – Wholesale price)/Retail Price * 100 = Purchase Markup %
If an item has a wholesale cost of $5 and retails for $12, the purchase markup is 58.3%.  The percentage is calculated as follows:
($12 – $5)/$12 * 100 = 58.3% PMU

Markdown %
Markdown % is the reduction in the selling price of an item after a certain number of weeks during the season (or when an item is not selling as well as planned).
If an item retails for $100 and we have a 40% markdown rate, the NEW selling price is $60.  This markdown % will lower the profit margin of the selling item.

Shortage %
The shortage % is the reduction of inventory due to shoplifting, employee theft and paperwork error.
For example: if the store had a total sales revenue of $300k but was missing $6k worth of merchandise at the end of the season, the shortage % is 2%.  (6k divided by 300k)

Gross Margin % (GM)
The gross margin % takes the purchase markup% profit one step further by incorporating some of the “other” factors (markdown, shortage, employee discount…etc) that affect the bottom line.

100 + Markdown% + Shortage% = A
A x Cost Complement of PMU = B
100 – B – workroom costs – employee discount = Gross Margin %

For example:
Let’s say this department has a 40% markdown rate, 2% shortage, 58.3% PMU, .2% workroom cost and .5% employee discount, let’s calculate the GM%
100 + 40 + 2 = 142
142 x (1 – .583) = 59.2
100 – 59.2 – .2 – .5 = 40.1% GM

RTV stands for Return-to-Vendor.  The store can request a RTV from a vendor when the merchandise is damaged or not selling.  RTVs can also allow stores to get out of slow sellers by negotiating swaps with vendors with good relationships.

A linesheet is the first thing that a store buyer will request when checking out your collection.  The linesheet will include: beautiful images of the product, style #, wholesale cost, suggested retail, delivery time, minimums, shipping info and terms.  Great news!  We have developed our very own Retail Recipes linesheet template.  If you are a current client (or past client) and would like to get a copy, please email with “I want my linesheet :)” in the subject line.

So can you do it?  Share with us your thoughts on talking the “retail” talk here!


Grace Kang
Your Retail Product Mentor

p.s. A BIG, warm welcome to all of the new readers who joined our community! You are going to love the resources you will find here to help you make your product retail-ready… Enjoy!


Are you looking for a sales rep?

Come check out Grace’s feature on Oh My! Handmade Goodness blog on how to find the right sales rep!



Do you have a FUN board?

fun board
Happy Wednesday, 

When you first meet someone new, what is it that “thing” you remember about that person? Part of it is could be what they looked like, or perhaps their hobbies or profession. However, what makes a person really memorable is if they have a great story to tell. Everyone’s got one, but it’s those who know how to tell a good story that will make them stand out from the crowd. The same goes for building a memorable brand. As a new or emerging designer, there is so much time and effort spent on marketing your product but without without a good story you’ll blend into the hundreds of other brands vying for the same attention.

Every successful brand has a compelling story to tell – be it how they got started, what “sparked” the idea, or what credibility they bring to the table or what problem it solves. However, what makes it even MORE compelling is when you can also inject some humor or personal elements in telling your story. This unique combination creates a story that is personable and give you an edge against your competition.  As someone who is constantly checking out new designers, it makes the selection process that much easier when I can relate with their story and can easily share with my customers.  It’s an added-value that is low cost to you!

In order to build this story for your brand, you must first verbalize it for yourself. A great tip is to list some FUN things people may not know about you and create an “inspiration” FUN board. By piecing together different sources of inspiration, you will be able to formulate a story that is “uniquely” you.   My inspiration FUN board is dedicated to my loving father, who passed away this past week.  He was a thoughtful and creative man who inspired me take risks and follow my dreams.

So are you ready to take action?  Create your own FUN board and share your experience here.



Grace Kang
Your Retail Product Mentor

p.s. A BIG, warm welcome to all of the new readers who joined our community! You are going to love the resources you will find here to help you make your product retail-ready… Enjoy!

p.s.s. I have two spots that opened up in my private coaching program.  If you are interested in taking one of these coveted spots and start up-leveling your business, please email for a 15-minute “Get Acquainted” session!  I look forward to hearing more about your business.







What better way to delight your current and potential clients with an unexpected surprise?  If you are looking for that special touch that will set your business apart from the rest, I would highly recommend becoming a member of Pink Olive’s VIP Concierge Gift Service.  Let Pink Olive do all the work for you while you take the credit and spend your valuable time doing what YOU do best…. your clients will thank you for it!




“I learned so much in Grace Kang’s Retail Recipes 2 hour workshop on how to get your products retail ready.  She gave us a checklist that made me see clearly the missing pieces and why I’m not retail ready yet!  I knew right away that I needed to sign up for her retail coaching/consulting package.  Grace is the missing link who can help me resolve many of the issues I am currently facing, help get my business to the next level and my products into retail stores.   I am very excited to start working with Grace!”
– FOUNDER, Divine NY, Rekha Krishnamurthi


Grace Kang is founder of  Grace works with emerging designers how to sell to more retail stores and create a desirable brand.  As a former buyer for Bloomingdale’s, Saks and Barney’s New York, Grace knows what retail buyers are looking for.  She can help “jump-start” your business by guiding you in the right direction using her formula for retail success.  Grace also operates two retail stores in NYC called Pink Olive and balances her time with her new husband and cat.  To get your FREE Checklist Report – 10 things you MUST do before approaching a retail buyer, visit