In the ideal world, you will sell every piece of inventory at your target markup. But let’s be realistic. Whether you’re new to the industry or a seasoned veteran, dealing with excess inventory is something you’ll have to deal with at some point. Mitch Heiman of Perrin Sportswear has some tips for managing and moving leftover product. Today he shares how you can limit surplus inventory and what strategies you should consider when you’re looking to convert slow-moving products.
What’s the first step you take when looking to move slow-selling inventory?
To make a determination in moving product, you need to classify your inventory. We have 4 classifications that we work with.
The first classification is ‘active’, which is the inventory that's in your line and that you're selling day in and day out. This product should represent your standard pricing.
The second classification is ‘discontinued’, which are products that are in your line that you're not going to be carrying the following year because they aren’t giving you the turns you were looking for. You may or may not want to incentivize this category with lower pricing. Either way, your goal is to sell down/out of this product whenever the opportunity arises.
The third classification we use is ‘promotional’, which is a product that has slowed down, or you have more than a fair amount of inventory, and you're looking for ways to promote this product. For us, promotional is first quality goods, all sizes, and a good assortment available in quantities and colors that we are offering at a lower than normal price.
The fourth ‘classification’ is ‘close-out’, which is product that you're typically going to have to discount the most or be creative with in order to move it. You might have broken sizes or limited color availability. Once you’ve classified your inventory, you can decide what types of plans or strategies you want to employ to start moving that product. Remember, the goal here it to get rid of this product and turn it into cash, so pricing needs to be aggressive here.
What strategies would you suggest applying to move product other than pricing?
The first thing you can do is to look at remerchandising or marketing your products differently. Some decorators have a showroom, others will make more use of an online platform, sales representatives, or they see their customers at trade shows. Regardless, sometimes it's not necessarily that the item is bad, it may just how you're marketing it. How does it look on your website? Are the selling features clearly understood? How is it in your booth? How are you decorating the products that seem to be slow movers? See what you can do to market or merchandise the product before you look at other options.
What kind of marketing strategies do you use to promote slow-moving inventory?
We may send out email blasts to our customers. At a trade show, we highlight the product with a variety of decorations and applications to expose it more.
If you have a couple of products that you want to move, you can bundle these items and discount both. You can often sell more inventory by using a bundling technique, because you are typically moving twice as much.
You can take a product and offer it as an incentive, which works well for lower-cost items. If your customers buy a certain product then they can get select inventory at a reduced cost or even get something free.
You can also incentivize your sales team with some additional commission ─ if they work on commission ─ to motivate them to sell some of the inventory you're looking to move.
What if you still have leftover product despite having tried multiple strategies to move it?
Talk to the garment manufacturers/distributors. Some will allow you to return or exchange products. In some cases, if you have a good relationship, they might not ask for a restocking fee. Even if there’s a fee, it might still be more advantageous to you than tying up your dollars.
Attend a local flea market and/or craft fairs. You'll probably find a variety of opportunities to sell your product at a reduced rate.
Consider donating. We donate products to multiple charities, shelters and relief organizations in the area and throughout North America.
Do you have tips on preventing the amount of leftover product?
Find out what your manufacturers are planning on making. If it's through a distributor, ask how long and what type of stock position they plan on carrying. Based on your turnaround times, work with people that get you your products in time ─ that way you're not even carrying excess inventory.