Hardware Retailing

OCT 2018

Hardware Retailing magazine is the pre-eminent how-to management magazine for small business owners and managers in the home improvement retailing industry.

Issue link: http://www.hardwareretailingarchive.com/i/1030469

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Page 92 of 102

HARDWARE RETAILING | October 2018 88 Finally, customers may not be buying a product because they believe it is of poor quality. Hollingsworth says anytime she brings in a new product, she will ask customers to let her know how the product works for them. "If we get a few customers telling us the product doesn't work well or that it is of poor quality, we get rid of that right away," she says. "We don't want our reputation to suffer because of a product that doesn't work." Clear It Out After identifying those slow-moving items, it's time to send them out the door. Hollingsworth does that through a series of markdowns. First, she labels each clearance item with a red sticker on the bin tag at its home location in the aisle. Items start out at a 50 percent discount. If after a month, the item hasn't sold, she marks it down to 75 percent the second month and 90 percent the third. If at any time during the mark-down period, clearance products begin to sell, they will stay at that level until they sell out. Leaving them in the home location has proven to be the best choice for moving those items quickly. Customers looking for that item are going to that location anyway and are likely to grab the marked-down item first. If, after getting marked down to 90 percent, and sitting for 90 days in the in-aisle location, the item still hasn't sold, she moves it to an endcap specially marked as clearance. If the item still doesn't move after another 30 days, she donates it to charity. While this system has provided Hollingsworth with a good guideline, her approach might differ according to category or store location. In her location in Santa Ana, California, she has a bargain zone where she will place all clearance merchandise instead of sending it to an endcap. She's discovered that approach is more conducive to that location, which is in a lower income area than that of her other two stores. And there are plenty of ways to be creative as you're unloading the items you don't want. For example, Hollingsworth recalls one year where she purchased some chocolate bars at a market that didn't sell as well as she'd hoped. "We found these high-end chocolate bars, and my sisters and I loved them," she says. "But it soon became apparent people just weren't going to pay $15 for a candy bar. We had a lot of this chocolate left over and ended up giving it to our employees as gifts for Christmas—before it had expired, of course." Perhaps the most difficult part of clearing out dead inventory is resigning yourself to the fact that you will either break even or take a loss on those items. You're not likely to get the price you wanted and you're likely to get only a tax write-off if you donate it to charity. However, keeping it on the shelf will cost you more money in the long run because you're robbing yourself of space where you could be selling something else. Get rid of it as soon as possible. "The more time a dead item sits on the shelf," says Hollingsworth, "the more expensive it becomes." After sitting for 90 days in their home location in the aisle with no movement, clearance items get moved to a designated endcap. " The more time a dead item sits on the shelf, the more expensive it becomes. " —Kelly Hollingsworth, Griffin Ace Hardware

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