SOME OF YOU will already be making your purchase decisions for December, and you might be hitting a wall as you juggle cash flow while the new product starts arriving. Good inventory control isn’t just about clearing space in the display cabinets; it’s also about finding some room in the bank account in order to make payments. With that in mind, the starting point for your December preparation is to actively clear the old items that are not serving your needs nor those of your customers.
1. SET A GOAL. To achieve your cash flow needs, how much money do you need to get back into your bank account? What would see you comfortably able to afford the product you need to sell over December?
2. IDENTIFY THE TARGETS. To realize this cash, which items need to be moved? If you’re still returning a profit on these items at a reduced price, you may not need so many sold to give the result you want. If you’re going to cut them more ruthlessly, then they will sell quicker but more of them will need to be sold. Of course, some items won’t sell at all. Assume you will need to move at least 50% more inventory items than you really need to allow for this.
3. RE-PRICE. Chances are these items have sat on your shelves for a while, and their current retail price may not reflect market value or even the cost of their materials. Re-pricing them will give you a better opportunity to reassess them. Pricing them down may help move them on, while pricing them up may give you a more accurate starting point from which to discount them.
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4. MAKE THEM LOOK PRESENTABLE. Are the labels worn? Have the items been given a proper cleaning recently? If not, this may be half the reason they haven’t moved on. A quick polish and re-label may make all the difference.
5. OFFER STAFF INCENTIVES. A discount of $100 on a $1,000 item may not enthuse the customer, but the promise of $100 to any staff member who sells it at full price may get a much better response!
6. DISCOUNTING IS STILL AN OPTION. If you still have product you are tired of looking at, then give the customer a good reason to take it away. Sometimes you just need to cut your losses. If a customer is looking for a deal on a new piece, why not offer the item at full price with one of your old items thrown in?
7. MONITOR YOUR PROGRESS. This is not a set-and-forget plan. You will need to review it regularly to see what progress has been made. Give these items their own ID tag in your reporting so you can quickly view what has gone and what you still have left. Talk to staff regularly about them. Remind everyone which pieces you still need to see leave.
Old inventory management is always a work in progress, but it can be particularly important at this time of year when you need to start topping that pre-December cash flow up. An active strategy will work far more effectively in this regard than leaving it to chance.