Turning a Profit on Slow-Moving Inventory

In a few weeks, retailers will wrap up the third quarter and begin preparing their stores for fall sales and a profitable holiday season. But, what can you do when summer is almost over and you still have slow-selling merchandise from spring and old products from last year? Buying the right amount of merchandise for the selling season is not an exact science. If you’re a member of a co-op or buying group you may get help from inventory planners or product merchants, but they can miss the boat too.

Inventory Management: Know When it’s Time to Let Go

When you’re in retail, excess and out dated inventory is simply a fact of life. Inventory management is critical to the success of your business and requires vigilance to keep things under control and prevent tying up your cash flow. If products haven’t sold within 90-120 days, it’s time to let them go. So, what should you do at the end of the season with slow movers and excess inventory? Clear them out to make way for new products that will be in demand next season. In retail, the most effective ways to move product are discounting, bundling, gift with purchase and donations.

End of Season Sale

Bargain hunters love to save by buying products at the end of the season. Group discounted merchandise together in one section to make it easy for shoppers to locate. Put a big “End of Season Sale” sign in your window and another sign in a highly visible area new the discounted products. Promote the event on your store’s website and on social media, Discounting is the #1 way to reduce inventory levels,

Bundle Products
The second most popular method used to clear out inventory is bundling. Taking a group of products and selling them together at a slightly lower price is a common practice in the food and cosmetic industries. It can also work in the home improvement business. Although you are offering a discount, you can maintain your margins and generate a profit on the sale.

Bundling fast-turn popular products with slow movers makes the less popular products more appealing to consumers. Most of those who want to buy the popular items will consider the slow mover to be a bargain and think the bundle is a deal.

You also have the option to bundle multiple units of the same products at discounted prices to move excess stock. Some simple examples are flower pots, grilling utensils or solar lights. Bundling complimentary products such as portable grills and a meat thermometer or garden tools and planters also works,

Use Products as an Incentive to Increase Transaction Amount

Everyone likes getting a free gift with purchase. If you have an abundance of inexpensive garden tools, try “Spend $25 or more and get a free pruner.” Just set a reasonable amount you would like shoppers to spend to receive the free merchandise.

Donate Old Merchandise to Charity

Rather than holding on to old inventory, you may want to donate it to a charitable organization. Your business will be helping someone and you cut your taxes by using the inventory as a tax deduction.

Clearing out old merchandise and reducing excess inventory is a more efficient use of your shelf space and will increase your cash flow when products are purchased or donated. This may not be the most rewarding aspects of inventory management, but it is one that every retail must handle successfully.