The problems of having leftovers are more than just taking up good shelf space and the aggravation of seeing old merchandise.
Leftovers decrease a store’s profit. Profit comes from the turnover of merchandise. The best-selling items sell first so that without the ability to reorder these, increasing turnover fades and the store is left with the less-than-desirable goods. Each day a store owns an item it costs them more money – money that could grow in the bank or be invested in faster-moving merchandise.
Every store that sells products runs into the problem of having slow-moving merchandise. Unused, end-of-line, dated, unsaleable and discontinued merchandise is the bane of all businesses, no matter the product.
Here are eight ideas for you to consider – most are applicable to bricks-and-mortar stores as well as online stores:
1. Selective temporary retirement
If you have goods that are perennials, ones that would be reordered next year anyway (e.g. plain white t-shirts, Christmas decorations) there could be justification for not putting them on sale as you’ll be saving on freight, which offsets the interest on the money lost because the goods sit on the shelf. Keeping these goods from one year to the next may be advantageous if the prices increase the next year. It is wise to re-ticket and price these items when they’re re-introduced.
2. Buy less
Don’t be hoodwinked by suppliers who, in order to encourage larger orders, will offer an extra discount for orders over X amount (determined by quantity, weight, or dollar amount) or pick up part or all of the freight charges.
Whatever saving may be realised is offset by having goods in stock longer than necessary and leads to leftovers. It is best to buy small quantities of an item until it is proven that it can sell.
3. Moving goods around
It’s not unusual to find that some goods haven’t sold because of where they are placed. Moving goods around has, on occasion, made a slow-seller into a good, if not great, seller. In retail stores, different things sell better at different times in different places. Hence, rearranging merchandise may lessen the number of things that need to be put on sale.
4. Grouping – putting like things with like things
Leftovers are easily identified by shoppers because they are treated as leftovers. It doesn’t take more than a few minutes to find a store’s leftover area. Grouping items from various suppliers or lines can be by design, colour, use, shape, price, material or a combination of any two themes. Pulling things into groups separated by space makes each group important.
Grouping is best when there are eight groups of five items rather than having one group of 40 items or 40 individual items. As items are sold out of a group, the group can be reorganised. When merchandise is in one big group, nothing is important because customers’ eyes get lost in the multitude or variety.
5. Signage – something that allows customers to know what the price is without having to turn it over to see the price
Tickets should be placed logically; aligned with an edge or rim, to the left or right hand side, and always right side up. Many items remain unsold because the price was not where it could easily be seen.
Customers hesitate to ask because they don’t want to be embarrassed if the price is too high for the situation they are looking to fill, or they don’t want to waste their time if it is not up to the standards (often determined by the price). And looking for someone to ask is seen as a waste of time.
6. Inventory control – the ‘old-fashioned’ way i.e. handle the product
The important thing when working with products is “rate of sale” (when and how much was bought and sold) rather than total sales of an item/line. Why is this important? Every item cycles differently.
That is true with items that are related by category, size price, colour, etc. Hand counting keeps you aware of what is and isn’t selling.
These systems can be as simple as a tally count. If you use a computerised system ensure you don’t become captive to data entry, SKU’s and numbers rather than goods that have a personality.
I believe in counting inventory on a rotating basis where everything is counted at least once a month or every six weeks, and as new similar items are received, the records are corrected. Merchandise needs to be handled.
Many slow-selling items are left in the back room, behind something, in a cabinet, because they don’t have to be accounted for until one takes an inventory for accounting purposes. Too late. Too often goods get sold and not replaced from understock or the tail-end of a line gets left where it was, a lonely product at the back of a shelf.
7. Donations to charitable organisations
They are always looking for ways to raise money. Many have auctions or other events where they offer their members and friends a chance to help the group raise money by buying or bidding for things.
Leftovers can be moved out by offering them to such groups. Besides being a good method of getting leftovers out of stock, it can be a form of public relations or advertising. The product is deductible at your cost.
In addition to looking for things to resell, some groups are looking for prizes or awards for honouring special efforts of their members of special standout in the community, another opportunity for eliminating leftovers.
8. eBay store
Online shopping site eBay is a method of penetrating a much larger market than your current local area. You have the opportunity of putting your products on eBay for sale – whether anonymously (so you don’t cannibalise your in-store sales) or as an eBay shop.
You choose the price you’re prepared to accept and put the product on the site for a given amount of time. Worst-case scenario is (a) you don’t sell it or (b) you sell it for the price you set. Best case scenario is a group of people have fallen in love with it and raised the price to something far higher than you imagined.
Hopefully this has given you some ideas on how to move that stock, order fresh stock and get the dollars flowing!