Since March is Spring Cleaning Month.. This is a good time to clean out the closet and get rid of old products. I know many eyecare offices hate to put product on sale, but it actually cost you money to return or exchange inventory. (See inventory reduction post) . If the product is not selling put it on sale now.. have sale board, do 2nd pair reduction, put in sunglasses.. the name of the game is move merchandise, don’t send it back. Bob Phibbs has some interesting thoughts on moving merchandise and why you should do it. It does not devalue you or your office.
Clearance. A fresh start that makes way for new inventory in your store.
Many retail merchants tiptoe around inventory markdowns, and it is unnecessary. Your money is already gone; holding on to it just ties you to the past.
But many retailers feel that they must get back whatever they paid for their inventory, no matter how many years ago the merchandise first arrived in their store. This thinking is murder on their cash flow.
Other retailers feel there will always be a demand for a part or accessory to a model or product, even if that product is no longer sold.
This blog isn’t about inventory being like milk and getting spoiled if it sits too long – that blog Merchandise Doesn’t Get Better With Age is here
This blog is about the difference between a sale and clearance. Too many retailers avoid aggressively clearing out old merchandise either because they feel they will lose money when they sell it, or it’s too complicated to know what to clear out. Neither is true.
If merchandise is old, you’ve already lost the money. The fact it is sitting on your display shelves doesn’t make that any less true, but it does make your entire store look dated, out-of-touch or just plain old.
Inventory clearance is an aggressive form of balancing open-to-buy. If you’re not sure of what that is, here are Four Tips How To Avoid Overbuying Merchandise For Your Retail Store so you don’t get in this predicament again.
No matter how you look at it there is bound to be leftover merchandise in January that needs to be put on clearance to get it out the door.
I’m not talking about a storewide 20% sale of your best and brightest. That won’t help clear out the oldest inventory. I am talking about selling off the ten types of merchandise you need to clear out at the beginning of every year.
The more impressive the clearance markdown is from the original price, the faster the old inventory will go. Remember when customers approach these types of merchandise, they are only thinking about their savings off the original price; not how much they are going to spend.
Here’s my rule of thumb for brick and mortar retailers:
- Start your clearance at 30% off marked prices for one week. Alert customers via social media or email that selections are limited.
- The following week, markdown whatever merchandise is left at 60% off for another week. Again alert your social media followers – maybe even with a paid Facebook ad.
- After another week, donate it to charity or if you have to – write it off as a loss and throw it out. Do not let it stay in your store or backroom.
Once you have aggressively cleared out your laggards, do a physical inventory (see how here) so you have an accurate picture of new product you need to buy at retail trade shows.
Nothing feels better than getting rid of old baggage. Putting old merchandise on clearance makes it possible to begin 2014 with fresh inventory and a fresh start for your retail store.
Remember, only certain merchandise gets better with age. Do you really want to wait 10 or 20 years to re-merchandise and start selling vintage eyewear? No.. It is time to clean out the closets so to speak.. and really start fresh.
Bob Phibbs, the Retail Doctor®, has helped hundreds of small and medium-sized businesses in every major industry, including hospitality, manufacturing, service, restaurant and retail. He is a nationally recognized expert on retail business strategy, customer service, sales, and marketing. With over thirty years experience beginning in the trenches of retail and extending to senior management positions, he has been a corporate officer, franchisor and entrepreneur.
Reprinted with Permission from Bob Phibbs, the Retail Doctor