I was working with a potential new client who has several opportunities to increase their working capital. One of the biggest is that they are sitting on tens of thousands of dollars in inventory. And this isn’t a retail company. It’s a B-to-B company. But the premise is the same. Why sit on inventory that isn’t moving? It’s not doing any one any good except to sit on your books and take up much needed space in a place where you need all the space you can get.
All I could think about was the $100K in useless inventory that could be used to fund new initiatives (or be put in the owners pocket).
THE REAL WORLD RETAILING TAKEAWAY
GET RID OF YOUR EXCESS INVENTORY!
Redline the ticket, take the markdown, put it on sale in a prominent position. Start at 30% off or 40% off and see how much you can move. When the sales fall off, take another 10% off and keep doing that until the merchandise is gone.
I don’t understand why people insist on trying to sell merchandise at full price that noboby wants. 50% of $1,000 is $500. 50% of $0 is $0. So, do you want the $500 or do you want the $0? We both know the answer — Put the $500 in the till and get rid of the merchandise.