Eliminate your stagnant stock before they eliminate you
image source: www.eMarketer.com
We have all heard of the phrases “The economy is bad!” or “E-commerce is killing the retail business!”. These phrases are getting thrown around even more often in the recent years but what do they actually mean and how do they actually affect you?
The most major impact would be your inventory movement slowing down. And in any retail business, this is definitely a huge red flag. Simple observations will probably show that these excess inventories take up space and choke up your capital but if we take a step further to actually analyze the losses, they in fact impact your business on a larger scale. Many intangibles are being affected that you don’t immediately notice.
For starters, your capital being choked up will mean that you can’t use that cashflow more efficiently to get better deals or do marketing campaigns. You are also effectively reducing your ROI on your sales as these stagnant inventories will need to be factored into your costs of goods sold eventually and the worst of it all…. you are in fact paying rental for a dead stock! These events are by no means your fault as there are many factors that are actually out of your control.
Having said all the above, how do we overcome these? Here are some tips:
1. Refresh your displays!
Displays can be easily rearranged at next to no cost so that the eye-catching designs are in front. Change your price tags to new ones so they look like they are from a fresh batch.
Pro Tip: human eyes tend to notice colorful items first so place brightly colored signages or marketing materials (they’re free!) provided by your supplier at the front of your store.
This is probably one of the most common strategies out there but even then, there are special tricks to fully utilize a bundle. Most common bundles go for “buy 1 get 1 free” or “buy 2 at $XXX” or “Buy a pair of frames at $XXX and get the lenses free”.
Pro Tip: Ideally you would want to pair off a hot selling item with a stagnant inventory.
3. Transfer the risk of stocks to the Supplier entirely
If retailers had a way to exchange their assortments with their suppliers, these would mitigate the risk of a stagnant stock. By negotiating a deal with your suppliers to take back w