Five smart ways to shift excess stock
Issued by Red Ribbon Communications - Jan 16th, 08:49
Surplus stock is one challenge that every retailer wants to turn into an opportunity.
Running a retail business demands intellect, nous and an instinct for managing stock and supply to ensure you always have the cash and space you need to grow and expand. Unfortunately, excess stock is a problem that can happen to anyone. It can take up back-room or shelf space, tie up capital and prevent you from investing back into your business. Managing stock requires attention to detail, an awareness of product movement and a clear view of inventory. That said, no matter how well you plan you can still end up with excess inventory thanks to issues outside of your control. Fortunately, there are ways to manage this.
Here are five smart ways to take that surplus stock and the challenge it represents and turn it into an opportunity…
01: Refresh, re-merchandise or re-market
Are you marketing the product properly? Sometimes it isn’t so much the stock that’s the issue, but how it is perceived by the customer. If you’ve got a shelf of surplus that nobody wants, try to refresh your marketing efforts. It’s a good idea to do this in conjunction with repositioning the products in the store. Switch up their shelf arrangements or put them in a different place. Also, consider refreshing the attitude of your staff as they can be key to engaging with customers and shifting those products.
“As I always say, you can have a million-rand worth of stock in your stock room, but if no one is buying it, you’re on zero. I’d rather have one hundred rand in cash than a million rand’s worth of old, dead stock,” says Jonathan Franco, Founder of Cape Town store Third Eye Wear and Vend customer.
“What differentiates our store from others is that many of them keep their products locked away and customers can find that very intimidating. Whereas in our store we try and create more of a fun environment. Everything is open, everything can be tried on. We encourage Instagramming and live videos,” says Jonathan.
02: Invest in the strategic discount
If you don’t have any luck, then consider lowering your prices incrementally. You can use this as an opportunity to create a sales event such as a flash sale or running a storewide promotion. This can have the added advantage of bringing customers to your store. Add in some bells and whistles, build the ‘if I don’t get it now, I’ll lose out’ mentality, and make it more about the experience than the sale.
It is important to time your sales carefully and to minimise the times you do them. Too many will lose engagement and allure, and customers will end up waiting for your sales before they do their shopping. Also, use this as a chance to capture critical customer data that you can add to your loyalty programme or newsletter. Of course, discounting isn’t for everyone, especially those stores that cater to high-end markets and need to maintain a specific image.
“Often issues come into play when items have been sitting for a while and have a broken size curve, which means they are no longer contributing to telling the seasonal story they were intended for,” says Betty Hardcastle, Co-owner of Cape Town baby clothing business Petit Love. This Vend customer adds, “In this case there are strategic performance levers we pull such as promotions, clearances and multi-buys.”
03. Bundle up
Bundling is the second most popular pricing method for retailers across all sectors according to Software Advice with an impressive 90% using this tactic it in their business. Climb on this bandwagon by grouping certain products together and selling them for a lower price than if they were sold separately. You can bundle multiple units of the same item, add complementary products to increase the value or pair slow-moving products with popular ones.
“Bundling works wonderfully for us as a brand,” says Betty at Petit Love. “We’re in a retail space where our customers already have so much to worry about, so any way that we can contribute to making their purchasing decisions easier is important to us.”
04: Incentivise and inspire
Low-cost items are perfect for this strategy. If they just won’t sell use them as giveaways or incentives that inspire people to sign up to mailing lists, newsletters and other marketing initiatives.
05: Sell them to online marketplaces or liquidation companies
Online platforms such as OLX or Gumtree can work as an alternative sales space to shift excess stock that just won’t move. You might not see a profit, but they’re a great way of getting rid of stock.
“These kinds of websites normally have a massive subscriber base, so if you put your product on there, your brand is all over it too,” says Jonathan at Third Eye Wear.
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