We thank Alyson MacMullan of Peak Retail Group for sharing her knowledge of retail sales; especially as it relates to a critical sales period for retailers. ~ Mary Ann Huffines, LBDC Client Manager
This is a wrap up of the Holiday Tips series
Think about your inventory in 3 piles:
GREEN – New, fresh merchandise that will sell at full price
YELLOW – turned from GREEN, will need a shallow markdown to move out of store
RED – Needs a heavy markdown to entice people to purchase
Your YELLOW AND GREEN merchandise will be competing with everyone’s markdown inventory the day after Christmas. Customers are in a sea of Clearance. The time to move through merchandise is when you have traffic in the store.
Consider taking a light markdown, say 25%, on holiday inventory the week leading into Christmas. You’ll sell more units at a higher margin than waiting until after when you’ll need to take 50% or more and probably sell less units.
Closely monitor anything turning from GREEN to YELLOW and YELLOW to RED using the same thought process. Put yourself in your customer’s shoes – would you be willing to pay full price for that item in January?
January is a tricky month because you’ll need to clear through merchandise. To offset the hit you’ll likely take to your margin, you’ll need to have enough full price goods available for the customer to buy. Many retailers don’t have the cash they need to buy into full price goods because they’re sitting on too much YELLOW and RED.
Inventory is by far your biggest asset and new, fresh, full-priced merchandise will not only increase your top line sales but will generate more profit, which means more cash in your pocket. Cash in your pocket means paying yourself a salary, covering your operating expenses and having the flexibility to flow fresh goods.