In this blog I look at how to spring clean your stockroom.
Tip 1 - Understand the cost
Before you do anything with those 200 Liverpool football shirts sporting last season's sponsor that you bought just in case they won the Champions League (a true story), you need to understand the real cost this stockpile puts on your business. Calculating the true cost can be surprising. At its very basic level it includes:
But most importantly is the impact it's having on your capability to keep your store trading efficiently. If you're struggling to raise money for new stock then you need to include the 'what if' factor into your costs. Remember old stock is often a depreciating asset.
Tip 2 – Just sell it!
Simple really, and while this may be the most obvious solution, many retailers I know are reluctant to part with their stock at realistic prices as they simply don’t understand the true cost. eBay is a fantastic resource for selling excess stock quickly. If you are selling individual items, then listing products is quick and easy; if you are thinking about ’job lots‘ there is also a bulk goods section.
If you are already selling online why not try a discounted section on your website or make a feature of these products in some way? Many E-Commerce platforms allow you to include best sellers and also bought lists, so discount and include these products here for maximum effect.
Tip 3 – The loss leader
A great idea is to use your excess stock as a loss leader. One merchant I recently spoke to managed to empty his shelves of a problematic product and increase sales of newer lines by simply giving this old stock away. Everyone loves a bargain, it can generate amazing results if targeted correctly.
If giving your product away seems too radical then think about ways of using it as an up-selling product or bulk purchase. One of the most effective uses of old stock can be to increase the overall value of the shopping basket. Schemes such as ’spend x and receive y’ and ’buy one get one free’ really do work, but do the maths and make sure you’re not selling yourself short. It’s important to include the cost of customer acquisition into your sums.
Tip 4 – Liquidate
If you want to get rid of your excess immediately then it could be a good idea to investigate stock liquidators. These companies will buy your excess stock in a single transaction, but usually heavily discounted. Very often they will rebrand or use their buying power to target different markets or segments that are just unreachable to the standard small retailer.
If you are going down this route it’s important to understand the true value of your stock, as discussed in tip one.
Tip 5 – Donate
Remember those 200 Liverpool shirts? Well, after gathering dust on this particular merchant’s shelf for over two years they are now being worn by some very happy children in Somalia. Donating these shirt turned into a fantastic PR exercise as well as providing an opportunity to do some real good for this particular retailer.
Understanding the impact excess stock has on a business and getting rid of it doesn’t need to be a particularly hard exercise, but very often our own attachments can get in the way of what can be a difficult business decision.
Is it time your stock room had a spring clean?