(1) This is a very personal choice. I am not a huge fan of sales or sale sections. Most of us are operating in small retail spaces (500-2500 sq ft). Our goal is to do as much in sales per sq ft as possible so every sq ft is critical to maximize sales. On an annual basis you can expect (with a well run inventory control system) to get rid of 1/3 of your underperformers on an annual basis. Assuming you have a good positive cash flow (which you should if you are doing inventory control) you should be able to pull underperformers on a monthly basis, eat the cost and bring in new items. I think it is OK to do after “season” sales- i.e. holidays, spring/summer, valentines, easter, etc. Again, evaluate sales for those items, pull the ones that don’t make the cut, and put those on sale at 50% off. If an item makes the cut and you will carry it again next year, put it in a box and get it off the floor and make room for stuff that will sell. It is OK to hold over seasonal merchandise so long as it is a good seller and you will buy it again next year.
(2) So when you say “get rid of under performers” you are saying 1/3 of your inventory may prove to under perform, and put those on sale at 50% after x amount of time?
(3) you should be doing a full item eval 2X’s per year and pulling all under performers then and any new items should have 3 months to make the cut and you can either give them a 2nd chance (not likely) or get rid of it to make room for an item that WILL sell.
(4) and how do you get rid of them? Donate?
(5) We donated to a local thrift store that supported a local wildlife sanctuary- they LOVED us and sent lots of customers our way.
(6) We also donated Jewelry to Dress for Success
(7) Kevin, this is a difficult one for some of us smaller retailers with little foot traffic. I know Candy says the same thing as you are saying here… but I have so many things that won’t sell for a long long time because I just don’t have the foot traffic. Perhaps I’m carrying too much inventory then?
(8) Your bottom 1/3 can be moved out over time. I have great strategies for doing this but if it is a 0 sales item- get rid of it! Slow movers can be phased out over a 6-9 mos program to slowly move things out, get your cash in hand and buy BEST SELLERS.
(9) I’d also be interested in the strategies you use to move the bottom third along if you’re opposed to sale sections
(10) Break your 1/3 into thirds based on your items sold report. Take the bottom 1/3 and get them OFF your floor, the 2nd third, give them 3-6 months before removing them, and the top 1/3 give them 6-9 months. This will take longer if your bottom 1/3 is closer to 1/2 of your inventory.
Final Comment:
Also, selecting the right merchandise and keeping it fresh is what keeps your customers coming back in. Do VM moves monthly- major ones seasonally and DO inventory control. Get a POS system that works for you and use it to the max. It will make your life SO much easier and boost your sales big time.
Responses:
It was good being reminded that inventory control follows right on the heels of location in terms of importance. Booting the bottom third & being strict about it to keep things fresh & appealing. Needed to hear this!