Although manufacturers and market centers reported strong orders during the summer season, there was a noticeable difference in traffic as some retailers decided to lighten their travel plans and purchase trips due to an excess of stock. It’s the latest hot topic in the gift and retail industry: overstock. Retailers across the country were forced by supply chain issues to double their orders last year in hopes of receiving at least 50% on time. Now the orders have arrived and the shelves and storage room are packed. So what’s a retailer with too much inventory to do? Here, retailer and author Carol Schroeder offers guidance to answer the one question that almost every retailer faces.
“Having too much inventory can harm your business in many ways,” Schroeder wrote in his latest Savvy Store Solutions column in Gifts & Decorative Accessories. “In addition to having to pay interest on loans or credit cards to finance the goods you have in stock, there is also what is sometimes called the lost opportunity cost. This means that you may not be making a profit on new products that are selling very well, because previous purchases take up storage and display space – and tie up funds.
If this is the situation at your store, Schroeder says you’re in good company, noting that even Target is struggling to overstock this year, and according to the New York Times they blame the situation on inflation and a change in consumer habits.
“One of the reasons for Target’s dilemma is that the retail giant had ordered large quantities of in-demand merchandise at the start of the pandemic and supply chain issues delayed shipment,” he said. continued Schroeder. “By the time the goods arrived, the buyers wanted something else. Fortunately, independent retailers are generally well positioned to react quickly to changes in shopping habits. In order to make the most of this flexibility, it’s important to stay in touch with your customers, ideally by spending time on the sales floor each week. Tracking sales by category will also help you detect what’s currently in demand before ordering new merchandise. »
Schroder recommends adding a cancellation date to all orders to ensure that you do not receive merchandise when you no longer need it. “This is especially important with seasonal products, and you can’t assume that the supplier won’t automatically ship your order when the goods arrive in their warehouse,” she continued. “We always stipulate that there are no backorders under $50 unless the supplier pays the freight, to prevent odds and ends from creeping in. This also helps to avoid shipping too high for small orders.”
If you find yourself with too much money and shelf space tied up in inventory, Schroeder says you need to act quickly to eliminate older products. “Some stores do a percentage off the entire store. But it’s more strategic to go through your store to see what needs to be marked down, usually based on how long it’s in stock. Think about how much each item will need to be cut to move – some goods may require a smaller cut, which helps to preserve your margins. Announce your sale as “20% to 50% off” and set an end date that creates a sense of urgency.
“Inviting your frequent customers to come in for a preview day with an extra 10% off can build some excitement for your sale. Keep your message upbeat, emphasizing that you need to make room for newcomers.
Schroeder also recommends going through your open orders to see if there are any you can cancel or delay. “Keep in mind that it’s unethical to order goods that you can’t pay for in a timely manner – and credit card debt can cripple an otherwise successful business,” she said. declared. “If money is tight, consider placing a few small shallow orders (i.e. just a few of each item) instead of deep ones to give your merchandise selection a fresh new look after you finish of your sale.”
Refreshing the store with new display ideas is also effective. “Moving existing merchandise to make it look new is often quite effective, as are changes to your visual merchandising. Keep an eye on the sidewalk for treasures that can be repurposed into new free light fixtures. In addition to updating the look of your store, consider additional special events such as signings and tastings to build customer loyalty and get your inventory out.
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