“I like my money right where I can see it… hanging in my closet.” That’s great for Sarah Jessica Parker, but not so great if you’re a fashion designer or retailer. To see the same products handing in your store, virtual or physical, for months on end can be the stuff of nightmares! It’s the literal manifestation of money that isn’t in your pockets. Granted, almost everyone in the business has some form of a dead stock graveyard. The hitch is when you’re starting to look like you’re hording your own ‘merch’ and on a regular basis!
Who is this ‘Cash Flow Killer’?
In this case, Dead stock can be defined as the merchandise in your store that hasn’t moved or sold in the last 12 months. Imagine seeing the same dress/bag/shoes/statement necklace/etc sitting in the front of your store; for a year! Ideally, they should have been sold within 90-120 days yet there they are, mocking you and your bottom line. It could be because you made too much of an item without the research showing your customers would appreciate it. Or perhaps it was factors out of your control; The cold season was the warmest it’s been in a decade, it was a political year or maybe the economic situation is downright awful. If this sounds all too familiar, for whatever the reason, there’s still hope.
Slay the Dead Stock
It’s decided that you can’t cling onto these items anymore. You’re at the point where selling it for a reduced profit, or even at a loss, is better than taking up any more shelf space. Nevertheless, you can make them work to your advantage! Pique your customer’s interests and draw in new ones; two birds with one stone. Therefore, if it’s been 120 days going on a year, there are three main ways you can turn that slow-moving inventory around:
Selling it for a reduced profit, or even at a loss, is better than taking up any more shelf space.
- REMARKET IT
There is a possibility that people actually want your product, but your marketing has let you down. A little freshening up could be the solution to getting those items off the shelves and into people’s wardrobes:
- Photography upgrade – Can’t over emphasise how important quality product photography is for the success of your business. Make them high resolution and from multiple angles so that your online customers could view it as if they were holding it in the store. Go the extra mile and incorporate lifestyle shots into your pictures. It could be images of your merchandise in everyday life or illustrating on a model how to dress it up and down.
- Location is paramount – Perhaps the reason a product isn’t selling is because of the category you’ve placed it under? Shifting stale inventory into a more prominent category, the forefront of a category or even a feature on your homepage could improve their conspicuousness and accessibility online. In your physical store, you can shift it into a different shop section or even work with the display to shine some light on these slow-movers.
- Keywords – Did you know that 86% of purchases come from online searches by clients? Product descriptions and titles should be done in a way that evokes a need to buy. Add to that the fact that you should also think like a computer and factor in the all-important SEO (Search engine optimization). If it’s been months since a sale, give the copy writing another try. Add more details and take into consideration how your customers refer to products (For example, tulle skirts are often referred to as ballerina skirts but your search engine may not know this.)
- SELL IT
If step one hasn’t helped, the obvious approach of discounts is required. We’re not talking about a mere 5% drop on the price tag. Dig deep and slash off about 35-70%. If you want to see these items moving, you’ll have to forget about your margins. However, use this step with caution. If used too often, they’ll begin to lose their appeal with customers or they’ll begin to ‘wait you out’ for the deals. Here are a few types of sales you can utilize:
- Clearance sale – Often used to move stock that hasn’t sold for the past 3-6 months. Have a couple of these a year, where you notify your customers directly via social media and email. If you can personalize the items you send via email, depending on their sizes or previous purchases, even better.
- Seasonal sale – Items that are season or holiday oriented can get a little tricky. You have a limited window before they lose relevance. What remains after that can be offloaded via pop-up promotions. Bargain shoppers live for great deals like these.
- Specific item sale – This is where you narrow down the focus of the sale to a need, product or particular type of shopper. It will also help to coordinate your marketing strategy and create even catchier marketing messages to get the results you need.
- Flash sale – There’s no greater power in shopping than the fear of missing out (FOMO). The psychological effect created by the limited sale’s sense of urgency entices shoppers to forget the budget and fill the trolley. The catch is to build up the anticipation by notifying your customers through captivating teasers on your communication portals.
- Daily Deal – A sale within a sale, this allows customers to buy a specified item at a much-reduced rate! Unlike clearance, which is an item no one wanted, a daily deal appears to still be a hot commodity when at regular price.
- BUNDLE IT
If you’ve noticed a common thread in the items currently in your dead stock, you could use this to your gain. Consolidating them in interesting combinations, and at a good price, can help to get rid of multiple pieces in one sale. Plus, you’ll have a very happy customer! You can choose to package them as:
- Several units of the same product but in different sizes, colour or designs
- Pairing them up with a complementary product you sell
- Combining a slow and fast-moving product in one hamper.
Even with the best strategies, there is the possibility that slow-movers will remain. You can choose to donate your merchandise to a worthy cause and enhance your image as a socially responsible brand. In addition, if you have lower value and small items you can give them to customers as bonus items. It’s a great way to thank them for their loyalty and introduce them to a product that they could end up buying in future.
If you’re in this situation at the moment, don’t beat yourself up about it. Having to deal with slow-movers will always be an undesirable aspect of retail business. Remember, this is not necessarily a reflection on the product. The above tips should help you turn them into cash and free up some store-space. After you’ve successfully cleared it out, you should investigate why it happened in the first place. That way, you can reduce the probability of being stuck with dead stock in future.