Just because you fell in love with that item when you saw it at the trade show doesn’t guarantee it will sell once it hits your sales floor. And when it doesn’t, you need a plan to get rid of it so you can replace it with something that will.
Let’s take a look at the things you can do to move product that isn’t selling.
What’s your turn?
Every retailer is familiar with stockturn, which is the measure of the number of times stock is sold within a specific period – usually a year.
To determine your stockturn rate, simply divide your last year’s total retail sales by your year-ending stock’s at-retail value.
An ideal stockturn rate is between five and 10. To improve it, you must closely control your stock – be firm about delivery dates and implement a strong discount program to clear out old product.
Control your delivery dates
Yes, you can tell suppliers when you want to receive your orders, but you will have to request this specifically in order for them to accommodate you.
Before you place an order, decide when the product actually needs to be in the store and then tell your suppliers what you require.
It makes no sense to take late-season deliveries if that will hurt you, and it’s just as foolish to receive goods – and have to pay for them – far in advance of your actual need time.
It is worth asking for delivery flexibility that suits you; while some suppliers may not be able to grant you your wish, if you don’t ask, the supplier always get theirs!
Know when to mark down the price
Retailers tend to think of all discounting as the enemy.
In reality – while there are pitfalls to discounting, including eroding margins – sometimes there is no other choice when it comes to clearing out what isn’t selling.
To be blunt, stores do not go out of business because they had to mark down a product’s price – they close when product is not selling fast enough to create the cashflow needed to cover expenses.
When done at the correct time, the first price reduction is always the cheapest. Clearing product before the price/value relationship is destroyed is critical; you should mark down items as soon as sales start to slow.
Let’s say you have an item that’s currently priced at $25 but it isn’t selling. If you mark that item down to $19.99, its value goes up in the customer’s mind.
Over time, it will take a much larger discount to create value – just ask a retailer who’s trying to sell Halloween costumes at full price in December!
Feel secure in knowing that discounting in this matter allows you to maximise your invested dollars; when you get those dollars back, you can reinvest into newer items that will yield higher margins and better stockturn.
As you walk your sales floor each day, consistently look for product that’s past its prime and mark it down accordingly.
Sales on seasonal products should begin just before the season ends.
If you wait until after the season or holiday is over, you will severely hurt your return, as customers will purchase these soon-to- be-out-of-season products at other stores with better pricing.
Packing product away for next year isn’t a good idea either because it never looks as fresh as it looked when it was initially received. Get the cash out of your investment and keep it working with new, fresh goods.
Displaying the sale
When you run a sale, run a sale! Display the product near the front of the store or in its normal position.
You can also use your ‘speed bump’ displays to house these products, and highlight them with banners, balloons or signs created specifically for the sale.
After the sale, move product to a clearly marked clearance area near the rear of the store so shoppers have to pass through displays of new product to get to it.
Too many clearance areas look like disaster zones and that’s no way to create value. Clearance items should be merchandised with the same care as regularly-priced product.
Ensure you have clear signage around your clearance area so that shoppers will want to stop and check it out before heading to the cash register.
Look at every piece of merchandise and every display on your sales floor as if it’s a pile of cash, because that’s what it is.
No matter how much you love it, if a product isn’t selling, it has to go to make room for something that will.
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