Merchandise, Markdowns and Moveouts
Or “How Not to End Up on Oprah“
By Cinda Baxter -- Gifts and Dec, 5/1/2008 12:00:00 AM
I have a confession to make: I recently watched Oprah. This will come as a shock to people who know me. In all fairness, the TV was playing in the background while I was working on my taxes. Once the show got rolling, however, it had my full attention.
See, the episode was about hoarding. A couple in Chicago, Sharyn and Marvin, managed to squeeze over 75 tons — 15 huge construction dumpsters' worth — of stuff into their 3,000-square-foot house. Not pizza boxes and toilet paper rolls, but new purchases, many still in the original bags and boxes. It took more than a decade to accumulate, and man-oh-man was it impressive. With the help of a professional crew it took six weeks to rediscover floors and furniture that hadn't seen daylight since 1994.
What does that have to do with your store (other than wishing for such dedicated customers)? Well, take a quick look around. How much stuff do you see that's overstayed its welcome? While I don't expect there will be dangerous mold (or worse) as at Sharyn and Marvin's house, something tells me there are non-performers languishing on your shelves, costing you money. Everyone's got them.
Given how soft the consumer market is these days, there's never been a more critical time for merciless re-examination of the lines you carry and the products you have. Every item that moves slowly is essentially holding your money hostage.
Bag it and Tag it
How do you get that money back?
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Walk out of your front door with two big shopping bags in hand. Call bag number one “Last Chance Charlie,” and bag number two “Donate or Ditch.”
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Turn around, look at your storefront, and remember how much of your personal income is wrapped up in its success... or failure.
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With that freshly in mind, walk back in the door, hang a right (or left, if the floor plan so dictates), and start inspecting your store shelf-by-shelf-by-shelf — every single item.
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Ask yourself how long a product's been there. Be honest (denial is what strangles your bank account). If it is longer than six months, you're losing money. You pay for that space, and that product isn't pitching in.
Case in point: For years, I carried a lovely line of spa items from New Zealand. It was quite unique; so much so that a customer who traveled to New Zealand with regularity couldn't find it when there. Periodically, she'd come in to replenish her stash. In my mind, that return business made the investment a good one... until I did the math.
During one of my “search and purge” strolls, I calculated how long some of the individual packages had been on the shelf, suddenly realizing the store was essentially servicing one customer by carrying the line. It didn't take much incentive for me to phone her and offer to sell her the remainder of the line at a discount, freeing up space for better selling lines. She was happy. I had cash.
Back to your two bags. If an item might sell at a slash-and-burn discount, put it in bag number one. If you think it's passed its due date (c'mon, you've been staring at it for a year), put it in bag number two. Those items get donated to your favorite charity, a garage sale, or silent auction (Note: you'll want to be judicious about the silent auction option, since those donations define your store to first time viewers).
Don't try to conquer the entire store in one day; fill the bags, stop, then start at the same spot the next day. By the end of the week, you'll have thinned out a lot of deadwood, thus opening space for new product.
Sales with Sell-By Dates
Now, about that sale: Don't cave in to the temptation of running it for months or starting a perpetual sale corner. That's just another version of cash-draining hoarding. Put it up front, creatively bundle related items, mark things way-the-heck-down, and put an end date on the calendar. If the stuff isn't gone by then, it moves to “Donate or Ditch.”
If you have doubts — or worse, begin backsliding — consider this: consumers are smarter than we give them credit for. They recognize stale products (especially after staring at them for months) and associate them with poor quality, inappropriate pricing, and a store that doesn't have enough business to move its inventory. Not the image you want.
The same rules apply to albums, for those of you with stationery stores. If a book is sitting stagnant, collecting dust, move it to the back room for one year. Still napping on the shelf? Dump it and find a line that pays its way. If your concern is that dropping the line will result in a nearby competitor picking it up ... who cares? If it didn't sell for you, odds are it won't sell for them either.
Greeting cards? Create bags of six assorted “sleepers,” staple them closed with a ribbon tie, and label them “Grab Bags.” Mark them down to your cost or just above, add a sign promising retail value of at least X (based on the contents), and move 'em out. Customers love get-more-than-you-pay-for offers, and who can't use a stash of greeting cards?
Got enough “Last Chance Charlie” inventory to hold a special sale? Go for it. Do it right before a market trip and use “Mary's off to the Show!” as a theme; suddenly, customers see it as an investment in cool new stuff on the way. Make it an annual ritual, and you'll build buzz over the years.
Breaking the hoarding habit is easy once you begin. Just remember to look at your lines as tenants; if they're not paying the rent, evict 'em and find a tenant that will. You'll be a lot happier — and more profitable — in the end.
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