Cathy Donovan Wagner, Retail Mavens
When cash is tight it’s easy to fall into the trap of running a store-wide sale. After all, what would attract customers more than “Everything is 20% off!, right? I’m here to tell you … don’t do it!
This plan will backfire on you! When you run a store-wide sale, you actually give your control away to your customers. They get to choose what they want to buy, at the discount you’ve picked.
And they will choose to buy your top sellers, not the older inventory you wanted to move out. You are then left to deal with the aftermath: Sold out bestsellers (which you now have to reorder) and ruined profit margins, and no one even looked at the old stale merchandise you really wanted to get rid of.
The alternative
When you have a store full of merchandise and a bank account running on empty, it is imperative that you take control of your inventory and your cash flow. The answer? You must take specific markdowns on specific inventory using specific timing. There’s a science to running a successful clearance sale. And as a seaside retailer, you need to know them.
You have to control what your customers buy and at what markdowns they buy it, so that you can realize your goal — more cash and less of the inventory you don’t want in stock. I get that sometimes you need cash fast. But there is a right way to accomplish that, and a store-wide sale is the wrong way. You can’t afford to run a sale the wrong way, because you’ll end up in a worse place than where you started.
You can’t afford to run a sale the wrong way because you’ll end up in a worse place than where you started.
When you run a sale, your main target is not your Thumbs (your top customers, who don’t mind paying full price for new merchandise and personalized service). Instead, you must talk to and sell to your Pinkies. Your Pinkies are your sale customers. They love a deal, the hunt of a bargain and the thrill of a discount. Pinkies are essential to every successful retailer because they help us move out old merchandise, putting cash in our pockets!
Plan now
To enter the next season in a good place with your inventory and your cash flow, start planning how to move out that old inventory, and create more cash: Instead of giving customers a discount on everything, only discount specific merchandise, starting with anything that’s more than a year old — nothing should celebrate a birthday in your store. This way of thinking will ensure healthy turnover of merchandise and a fresh look for shoppers.
To move out old, stale inventory, you can’t do a short flash sale. Your clearance sale should last for several weeks.
The purpose is to move merchandise out permanently. You’re not marking things down and then back up if they don’t sell. Keep marking them down until they’re gone.
We guide all our clients through this process with step-by-step instructions for moving out the most old inventory while putting more cash in your pocket. Don’t hesitate to reach out for support!
