Stock surplus: Myths and reality

It’s that time of year again when the buzz around the new season and collections has died down and the flow of customers to your store is slowing down? Unfortunately, just because you have fewer customers doesn’t mean you’ve finished emptying out your inventory.

What’s the best strategy for getting rid of that merchandise that absolutely has to go?

First of all, here are some myths and realities about unsold stock.

Myths

Selling your inventory at sale prices devalues your brand.
Advertising sales is unprofitable because there’s no profit to be made on inventory like this.
Advertising sales prevents you from making full-price sales.

Realities

Having too much stock directly affects a company’s profitability.
Inventory from past seasons is money that’s sleeping.
Revenue generated through sales allows you to buy new collections.
The space that’s freed up in your store makes it possible for you to show off new collections.
If some of your surplus needs to go into storage, due to a lack of in-store space, this generates extra costs.
The surplus that has to go into storage becomes invisible for customers who might want to buy it.
Selling online in a sale section is often not enough to completely liquidate your inventory.
The real cost of online liquidation is often underestimated. You have to take into account the costs related to storage (electricity, heating, insurance, taxes), employee salaries, order preparation, packing materials, shipping costs and—of course—the time it will take to liquidate everything.
The more time passes, the more your stock risks becoming outdated/obsolete before it can be sold.

Smart Ideas

Incremental rebate sale

Start with rebates of 30%, then move on to 40%, etc. This way, you’ll be able to make a profit on some sales.

Sale on select items

Liquidate the items that didn’t sell well at regular prices. This will attract customers into your store who will perhaps buy other items at full price.

Limited-time sale

Offer a significant rebate, but for a short period of time.

Back-of-the store clearance

If you still have inventory even after your sale, you can create a space dedicated to clearance at the back of your store. This will help whatever’s left to go little by little and may even encourage customers to come into your store—and some customers might be tempted by your new collections!

Online Sales

Online sales allow you to keep your merchandise elsewhere than in store and instantly free of space for new items. At the same time, you need to evaluate how long it will take to get rid of everything and the costs related to this type of sale.

Sell your surplus to a liquidator

This option allows you to quickly get rid of your inventory without having to host a sale. You can even ask the liquidator to not mention your brand in its advertising. However, the amount paid by liquidators falls well below the value of the merchandise.