In my many years of experience working for and dealing with creative product businesses, and of the many tactics and strategies people use to shift their products, I’ve found that stock clearance is one of the most misunderstood and misused. Stale stock traps money in your business, takes up valuable space, and can be a drain on you mentally – so how do you deal with stock that’s not performing?
In episode 17 of The Resilient Retail Game Plan, I want to give you my five top tips on how to have a sale. We’ll analyze your stock and look at how to plan a few short and sharp clearance events across key periods in the retail calendar; we’ll take a look at your messaging and how changing things up and being bold will get your customers ‘adding to basket’; and we’ll also discuss plotting out a promotional plan and the importance of meeting the legal requirements when it comes to offering discounts.
No time to listen? Read the episode in this blog post below!
I genuinely get excited talking about this – mostly because ‘how to clear stock that’s not selling’ is something that I am asked about frequently.
I’m going to be bold and say stock clearance sales are one of the most misunderstood and misused elements of running a product business. The most effective and least brand damaging way for you to clear excess stock in your business is to run a proper clearance sale twice a year.
A focused, planned full sale where you hit the stock hard and sharp – maybe with 50% off or more.
Key is that you do it for a limited time – as hard as it is to sell products at 50% off focus on the money that is currently trapped in your business and that you need to free that money up.
Extra stock in your business takes up space, it takes up mental space as well, because you’ll be thinking about it and thinking about what to do with it, and it sucks up cash. If you’re sitting on too much stock in your business, or if you’re sitting on certain items, too much of certain items, and you want to clear a way through, then having a stock clearance event a couple of times a year is the best way for you to do it.
Step 1 – Plan It
Traditionally you can plan it in for Boxing Day. The Boxing Day Sale leading into your January sale. That’s the biggest clearance event of the year. That’s when the retailers of all kinds have a big clear out. speaking, Don’t run your clearance events for that long – you want it short, sharp and you want it over. I would suggest planning a clearance sale twice a year, and plan to run them for two – three weeks at a time – no longer! The most important thing is that you get it into your calendar and you plan it out. When you’re planning your promotions, you can plan around your sale – you don’t want to run a discount promotion just before a clearance sale for example.
2 – Analyse your stock
Once you have a date for your sale – analyse your stock. Pull a list if you’ve got one or do a stock-take so you can understand how much stock you’re sitting on.
Number of weeks cover – the yardstick for working out how much stock you’ve got of an item. If you have 100 apples and in a typical week you sell two apples – then you have got 50 weeks worth of apples. If you have got 10 pairs of earrings and you typically sell five pairs of earrings a week, then you’ve got two weeks worth of stock. You can run this calculation on every single line in your business.
A comfortable place to be in your business is six weeks cover – however you obviously have some shorter or longer weeks. What you’re really looking for are lumps of stock – lines where you’ve got a lot of stock, and you’ve got a lot of weeks cover. You may also want to identify the lines where you don’t have a huge amount of stock but you seem to be selling it really slowly.
Create a list of underperforming stock – at least 20% slower than your bottom line. If you’re on around six weeks cover you’ll be looking at things that are on 7.2 and slower. You might even want to make it even more extreme and look at anything that’s 10 weeks and slower or only going to look at things that are twice as slow as the company average.
You should be looking at around 20 to 25% of your lines going into the sale. Otherwise, it can start to feel a bit overwhelming.
When you start to go thought your stock list – ask questions like – is it something that actually it’s got an expiration date? Is it something that you really thought would sell well but hasn’t performed? Is it something that no longer fits with the direction of the business or with the other products around it? To help you focus your sale items.
Step 3 – what’s your messaging
You need a clear sale message – is it ‘up to 50% off’ or is it ‘50% off everything’ in the sale? Are you going to say necklaces from £10? Be clear and keep it single minded.
There are legal requirements about pricing and messaging when it comes to sales. If your messaging is ‘was X is now X’ you have to make sure that product has been selling for 28 days at the full price before you say it’s a discount. Most small businesses are not going to fall foul of this regulation – most of you are only going to be clearing out stock after you’ve had it in your business for a considerable amount of time. This requirement doesn’t apply if you’re running a 20% discount – so don’t worry if you’ve done that in the past! If your message is ‘50% off everything in the sale’, then everything in the sale has to be 50% off. That sounds really obvious I know but be sure your check that – if you have any lower discounts in your sale use ‘from’ or ‘up’ in your message – it give more flexibility if you need it.
Personally I think if you’re going to have a short sharp sale, – you should take everything to 50% off straight away. You want to get in and out of sale mode as quickly as possible and in all honesty, there’s so many people doing promotional messaging about 20% off 30% off that I think the customer really reacts when it’s at a 50% discount, that is a really substantial discount.
Step 4 – Does your messaging flow
The flow of your messaging is important, especially if you’re going to be running this sale for more than one week. If you’re just going to be doing the sale for literally 48 hours or a week, you probably don’t need different types of messaging – but if you’re going to be running it for any longer then think about how you can change the messaging.
Some examples of sale massaging may change – ‘new lines added’, ‘further discounts’, final few days’ and last chance to buy’. This is not the time to be shy and retiring about trying to sell your product and remember it’s an amazing opportunity for your customers to get real bargains. So it should be something you’re shouting about!
Just to remember that every time you use new sale messaging – you have to do what you say, be consistent.
Step 5 – Make a Promotional Plan
So how do you turn steps one to four into a promotional plan? You want to think about how you are going to shout about the stock clearance event (this is one another reason to keep it short because it can be quite exhausting!). But you just want to get there you want to get out in front of your customer.
When you walk around a high street shopping area during sale time they often have posters that will block out the windows – floor to ceiling posters that say sale now on – everyone knows those red signs mean a sale. Think about how you can easily let your customers know you’re running a sale in your business. Is it that your social media posts becoming red sale posts? Is it that your emails have a red sale banner at the top? Is it that your homepage switches over to say sale now on?
Think about how you can really get your customer’s attention with your sale promotion. With sales more than anything, what you want people to believe is that if they don’t buy it now in your sale, they’ll miss out because it will sell out quickly. That’s another reason to have deeper discounts. You want customers to learn that if they want to get something from you in the sale, they have to be quick about it!
Find out more
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