Case Study: Norton Ditto

How an Open to Buy played a key role in turning a company around

 

Norton Ditto
Norton Ditto
During its centennial year, Dick Hite of Norton ditto agreed to share one of the key aspects of his success.  Since 1908, Norton Ditto has been the premier fashion retailer in Houston, Texas.  From the early days when the store's typical customer arrived at the downtown store in a horse and buggy to the Texas oil boom of the Eighties, Norton Ditto continued to grow.  Like so many independent retailers, Norton Ditto experienced some tough times at the turn of the century.  Mr. Dick Hite, the nephew of Ben and Sarah Ditto learned the retail business while working in the store from 1969 - 1984.  In 1994 he returned to the store, and in 2003 became the principle owner and CEO.  This year Norton Ditto is expanding their operation to two new stores.  He took on the challenge to turn around the company and has had incredible financial success in assuring Norton Ditto's continued place as a Houston tradition for the 21st century.  Excellent consulting and effective merchandise planning and controls are key ingredients to their turn around success.

 

Though well experienced in the retail industry as well as his experience in sales and marketing (he was a frequent speaker for the PGA), Mr. Hite looked outside his already strong staff for additional assistance to develop a management plan.  He knew that the key to turning around Norton Ditto's fortunes would be based on implementing an effective Open to Buy plan to increase their profitability.  One of the most important relationships he developed was with Management One® , one of today's best retail management consulting groups, to develop a rapid ROI (Return on Investment) strategy to maximize the two largest assets of Norton Ditto:  their people and inventory.  Mr. Hite stresses that the key to effective planning is a disciplined commitment to "following the plan."

 

It is no news that retailing is a cash flow business that must maximize sales and turn rates.  By increasing turn rates, a retailer will improve cash flow, reduce markdowns, increase margins, and indirectly increase sales.  Management One's® focus is unique in that it's not solely directed toward tightening the belt (Open to Buy) to maximize turn rates.  The focus is also on helping the retailer develop opprotunities to expand the business by re-investing dollars that were previously overcommitted in non-performing classes into new lines and classifications with growth opprotunities.  Breaking out classifications so that growth can be tracked more effectively results in inventory dollars spent with a much better return.

 

As examples, Mr. Hite points to his neckwear and belt classifications which were performing poorly and are now very profitable classes with neckwear selling through at 85% (and trust this author who has been in his store - he still has a fabulous selection of ties!).  Yet he acknowledges that sometimes the raw numbers don't tell the whole story.  He admits that if he looked at the numbers only he wouldn't be carrying certain lines, but he knows there are just some lines he must have represented to retain his store's image.  "It's all about the right balance of merchandise," explains Mr. Hite.

 

Marc Weiss, one of the principles of Management One® , calls Norton Ditto a "text book example" of what good controls and discipline can do for a retailer.  Evan Wise, the other principle of Management One® , emphasizes that "a key turning point is when a retailer deals with issues they can influence rather than making excuses due to circumstances beyond the retailer's control.  Inventory planning, balance and the right OTB at market is one area that every retailer must control."

 

Mr. Hite applauds the responsiveness of Ed Scott, his Management One® consultant:  "It's much more than a monthly review of our merchandising plans; it's his daily support that makes their service so valuable.  Moreover, Management One® is in tune with and truly understands the retail business."

 

In 2007 Smyth Retail became part of the Norton Ditto partnership by providing the underlying information system which effectively manages daily transactions and provides important reporting and analysis tools.  It also includes a direct interface to the Managment One® "Winning@Retail" merchandising planning system.  That interface makes it easy for Norton Ditto to send the information to Management One® quickly, accurately and easily over the Internet.  Management One® processes the information and the report can be returned over the Internet as well.  The combination of Smyth Retail's Merchant Plus! in-house merchandising system and Management One's® "Winning@Retail" merchandise planning provides Norton Ditto with the tools to accurately monitor performance to plans, quickly adjust plans to emerging trends, and efficiently implement pland changes.  Mr. Hite affirms "the timeliness and accuracy of better reporting tools of both Smyth Retail and Management One® provides the information to quantify and qualify management's decisions."

 

Mr. Hite sums it up best:  "There is no doubt that through effective planning and execution we have increased turn rates, margins and sales."