The weather is getting warmer and that means that many retail stores are falling prey to the dreaded “End of Season” sale. While there’s nothing wrong with offering the occasional discount to boost in-store traffic and to rid yourself of old product, it can become a problem when you are discounting in an attempt to salvage some of the capital you spent on inventory. A retail store functions best when discounting is a conscious, premeditated decision – not a last-ditch effort to make margins. Excessive discounting can also lower consumer perception of your brand and make customers who paid full price for the same item at the beginning of the season feel like they got the raw end of the deal.
If you find that you’re marking down more inventory than you would like – or offering steeper discounts than you had initially planned – it’s time to make a few minor adjustments to your sales strategy. Implement the following 3 tips to decrease or eliminate last-minute seasonal discounting in your retail store.
Know the Value of Your Products
Information is a currency in today’s retail marketplace. In fact, many customers value pricing transparency over stackable discounts – which can make customers suspicious about the integrity of your pricing strategy. If you want to maintain your brand perception while building sales and notoriety for your company, consider implementing radical transparency in your store. Transparency is more than just a trend in retail, it’s a movement. If you need proof, just take a look at the success of notoriously transparent retailers such as Everlane, Patagonia, and Warby Parker. To put this strategy to work, ask yourself if there are details about your products or your sourcing strategy that you could be sharing with customers to increase their perceived value of your inventory. If so, be sure to share those details on your in-store signage and on social media to promote your merchandise.
Order in Moderation
It’s difficult for any retailer to try to manually forecast how many units of a certain product or style to order for each season. Without the ability to automatically forecast and update inventory levels it can be nearly impossible to order the correct quantity of product, which leads to overstocks or understocks…and ultimately lost profits. Because of this, implementing a point of sale system with inventory management capabilities is essential for retailers. While it’s true that automating your inventory management system via POS represents an initial investment, the impact it will have on your bottom line and ability to provide excellent customer service makes it worth the price. Brian Sutter, Director of Marketing for System ID, explained it perfectly in Forbesby stating”the right system will seamlessly update all the available products and alert all channels when other products are running low. This seamless update ensures that the customer can always get what they want, when they want it.”
Create Demand in Season
Want to know one of the primary reasons that retailers scramble to recoup their investment on their inventory with seasonal sales? They aren’t building product awareness and excitement in-season. By regularly hosting in-store events and promoting each product through social media, in-store and email marketing, you can increase full-price product sales and reduce your need for unplanned seasonal discounting. If an item isn’t selling you have two options besides docking prices: the first being a request to return the product to the manufacturer or request another style, and the second hustling to promote that product through an intelligent marketing campaign. Many lost sales are simply the result of inadequate product marketing – but this doesn’t have to be the case for you. Take the time to promote your products on social media, through in-store events, via email marketing and through loyalty programs if you really want to make your inventory move.
Finally, remember that there is nothing wrong with making slight discounts part of your overall product marketing strategy. However, there’s no reason to lose out on margins by docking prices when all you need is to invest a little more effort and resources back into your products to exceed sales expectations and accelerate your profits.
Take advantage of ASD Market Week’s 90+ free retail strategy sessions this July 29-August 2, 2018 in Las Vegas.
By Nicole Leinbach Reyhle, RetailMinded.com