Taking the Mystery Out of Markdowns

It doesn’t matter if you were smitten with the item at your last trade show. You need to have a plan for getting rid of the item so that you can purchase fabric that will sell. Let’s look at what you can do to sell merchandise that isn’t selling.

It’s your turn.

Inventory turnover, or turn, is the measure of how often inventory is sold in a given time period. It is usually one year. Divide your retail sales for the last year by your year-end inventory at retail value to determine your inventory.

You must control your inventory to improve your turn rate. To clear product past its sell-by date, be firm with delivery dates and use a strong markdown process.

Control your delivery dates

You can tell vendors when your order will be delivered. You have to ask. Before you place an order, determine when the product will be available in your store. Then tell vendors what you need. If you don’t need them, it doesn’t make sense to order late-season delivery. It is also foolish to receive goods and then have to pay for them long before your actual needs. So request delivery dates. Although you may not always receive your request, the vendor will always fulfill it.

When to mark down

Markdowns are often viewed as a threat by retailers, when in fact it is a smart move to get rid of what isn’t selling. Stores do not close because they have to make markdowns. They close when the product isn’t selling quickly enough to generate sufficient cash flow to pay expenses.

If you do your job on time, the first markdown that you make is always the most affordable. Clearing merchandise before the price/value relationship has been destroyed is crucial. You should mark down items immediately sales slow down.

Let’s suppose you have an item with a current price of $25.00, but it’s not selling. The customer will see the item’s value rise if it is marked down to $19.99. It will be more difficult to create value if markdowns aren’t taken in time. Ask a retailer trying to sell Halloween costumes at full-price in December. You can feel secure knowing that markdowns will allow you to maximize your investment dollars. When you get those dollars back, you can reinvest in newer items that will produce higher margins or better inventory turn.

Every day, look out for merchandise that is past its prime. Mark it down accordingly. Seasonal merchandise sales should start before the season ends. You will suffer if you delay taking markdowns after the holiday or season is over. These customers will purchase soon-to-be out of season items at lower prices at other stores. It’s not a good idea to store product away for next season. Because it doesn’t look as fresh as when it was received. Keep the money out of your investment, and replace it with fresh, new goods.

How to show markdown merchandise

SALE is a way to make sales. The product can be displayed in the normal place or near the entrance of the store. This merchandise can be displayed in your speed bump display to keep it in stock during the sale. Use banners, balloons, or signs made specifically for the sale to highlight the displays.

Clearance areas that are too large can look like disaster zones, which is not a way to add value. Clearance products should be treated with the same care and attention as regular priced items. Display clearance items near the front of your store when you are having a sale. Move it to a designated clearance area at the back of the store after the sale. It should be stored at the back of your store, so that shoppers don’t have to go through new product displays to reach it. Sign your clearance area clearly so shoppers can stop by and inspect it before they go to the cash wrap.

Every piece of merchandise on your sales floor should be viewed as a pile of money. It doesn’t matter how much you love the product, if it isn’t selling, it must go.


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