By Francesca Nicasio
Having too much inventory is pretty high up on the list of no-nos for retailers. In addition to taking up precious backroom or shelf space, surplus stock ties up capital and can keep you from re-investing in your business or buying things you actually need.
That’s why regularly paying attention to your sales and inventory data is so important. You need to keep an eye on how products are moving so you can make the right purchasing and marketing decisions. At the same time, staying on top of inventory counts enables you to get a handle on the merchandise you have so you can prevent having too much stock in your store.
Still, excess inventory problems can sometimes turn up because of things you can’t control. Perhaps there was a sudden change in what’s trending, or your demand forecasts didn’t pan out as well as you hoped. Whatever the case, don’t fret. If you’re looking at a surplus of merchandise in your store, there are several steps you can take to liquidate them:
1. Refresh, re-merchandise, or remarket
When an item isn’t selling, the problem may not necessarily be the product itself. In some cases, the issue may lie in how you’re marketing or positioning the merchandise. Try to refresh your marketing and merchandising efforts when it comes to your slow-moving stock.
One thing you can try is to reposition them in your store. Put them in a different area in the shop or switch up their shelf arrangements. Retail management consultant Judy Crockett says that this could be an excellent way to freshen up your merchandise.
“Freshen the display, move things around, create new, brightly-colored signage and replace worn out price tags,” she advises. “Make it look new and fresh for your staff and customers–customers who may not have even seen the items in the previous location.”
Fashion retailer Vanessa Cooreman Smith of Flourish Boutique shares that they sometimes “re-market” slow-moving items in their stores. “We will re-photograph an item for the website, we will post a blog about the uses and advantages of the product, or we will display it differently in our brick and mortar store.”
Do note that while re-marketing a product can pay off, it may require you to shell out funds. Vanessa warns that retailers should be smart when implementing such tactics. A marketing refresh “can increase your cost in the item so be careful,” she says. “But if you have an item that you think could be a good seller, and your current images or marketing efforts aren’t doing it justice, then this can be a good strategy.”
Also remember that sometimes, it’s not just the merchandise that needs some spiffing up. In certain cases, you may also need to refresh the attitude of your staff. “It may not be that the product is a poor seller; it could be your staff does not like the product, so they do not sell it. Keep an eye out for this behavior,” adds Judy. When this happens, talk to your associates, re-train them, or find better ways to boost morale and motivate them.
2. Discount those items (but be strategic about it)
If remarketing or remerchandising doesn’t work, consider lowering prices for of excess stock. Kat Rosati, Brand Manager at Apparel Booster, advises retailers to discount prices at certain increments. “Start off with something small, say 30% and then continue to discount,” she says.
You can also kick this tactic into high gear by creating a sale event. Why not run a flash sale to instill a sense of urgency in your customers? Or, if you have a ton of merchandise that you need to get rid of, consider running a store-wide event and aim to draw crowds to your store.
Judy recommends hosting a high-impact event with “lots of bells and whistles” to attract customers. “The bigger the event, the better, since sensing or seeing a crowd, implies huge deals, and instills an ‘if I don’t get it now it won’t be here later’ mentality and sales will soar. The sale becomes more about the event than it does discounts.”
Plus, “if done right, you are gaining new customers to help regular sales into the future,” she adds.
Vanessa at Flourish Boutique echoes this and says that holding flash sales and events has helped them liquidate inventory while growing their customer base at the same time.
“Twice a year we have a big Overstock Sale where we encourage a door buster mentality and discount things as deeply as we can to free up our capital for new items,” she shares.
“We also do online flash sales where we mark down poor performing styles (and mix in a few good sellers as loss leaders). The nice thing about these types of sales is that they not only turn the inventory as desired, but they often lead to growth in our customer base and attract new consumers to our business.”
A note on sales:
Be sure to time and implement your sale events wisely. Doing them too often can result in the events losing their allure and can train customers to hold off on buying from you until you discount your items.
Additionally, make it a point to collect new customer information. Add them to your loyalty program or email list so you can reach out and alert them when you have new (and more profitable) items in your store.
Finally, remember that while discounting merchandise is a proven way to attract customers, it may not always be the right strategy for you. If you’re a retailer catering to high-end markets or if you’re trying to preserve a certain image, you may want to think twice before running a huge sale, and instead implement a different stock liquidation strategy (see below).