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Move Your Dogs Before the Dog Days

Every year right after Memorial Day my staff and I would go on a dog hunt. No, not the little stuffed animal dogs we sold by the packs (although that would be a fun staff training exercise), the slow-moving merchandise that was holding back our cash flow.

Every retailer has these dogs. We all wish we could be perfect buyers, always choosing the right items in the right quantities at the right time. Unfortunately that rarely happens. The great retailers, however, know that the sooner they clean up the mistakes, the better.

The key is to recognize the mistakes, find the dogs, and make them hunt. If you’re a fourth-quarter-driven retailer, you know it is a dog if …

  • You bought a case last year and couldn’t sell the entire case by Christmas.
  • You bought it earlier this year and haven’t sold a single item in two or more months.
  • The item is discontinued by the manufacturer.
  • The packaging has changed.
  • The box is crumpled.
  • Your staff hates it and won’t sell it.
  • A better solution is coming in soon.

If you’re a smaller retailer with a tighter inventory that needs to turn over faster, you might have more strict criteria than that. The key is to find the laggards, the slow-movers, the merchandise you’ve already paid for that isn’t paying you back, and turn it into cash.

Toy House and Baby Too in downtown Jackson
The Summer Fun Sale!

We pulled all our dogs in June for our annual Summer Fun Sale in July. We took the items off the floor, marked them half-price, and put them back out on special shelves in the middle of the store the night before the sale started.

Half-price?

Yes, half-price (or thereabouts, for instance $14.99 became $7.99). Our goal was to move merchandise quickly.

Get it out of the store fast, get the cash, and get back to restocking with new, better inventory that might actually make you some money.

I know some retailers like to do a gradual price reduction. I’ve never been a fan of that. First, it costs you time and money to reprice things. If you have to do two or three markdowns, you’re spending way too much. Plus, if an item has been marked down two or three times, the customer gets the perception that there must be something seriously wrong with the item. Third, by going deep on the first cut, we get hoards of Transactional Customers right off the bat. Three of our five busiest days in our 67-year history were actually the first days of our Summer Fun Sale. One big sale creates a lot more excitement than a gradual death march of price reductions.

Here is another way to think about it … If you bought a crib for $299 and put it on your sales floor at $599 for six months and didn’t sell a single one, how much money did you make on that space? If you answered zero, you’re wrong. You’re actually at negative $299. You’ve lost money on that space. You could try $499 for a month or two and see if it sells. If it sells, you made a little. If not, you’re still negative $299. Or you could mark the crib down to $299 where you know it will sell right away, get back to zero, and then put something else in the space that will make you money.

I also know some retailers who have a clearance section year-round. That is a shrine to the Transactional Customer. It is also a sign that tells your regular customers that everything gets marked down eventually, might as well wait. Since my focus was on my Relational Customers, I wanted my sale to be quick and the dogs gone so that I could put my store back together to look great for the customers I was trying to impress.

The Dog Days of Summer are coming. It’s best for you and your dogs to get them out of the store before then.

-Phil Wrzesinski
www.PhilsForum.com

PS We always started our sale on the third Thursday in July. People planned their vacations around it. Our parking lot was typically full fifteen minutes before we opened. By Saturday afternoon we had moved 75% or more of our sale stuff. After two weeks we went to BOGO on the remaining clearance items. The ultimate goal was to not have to have a Summer Fun Sale. We never got there. We always had dogs. You do, too. Make those dogs hunt.

PPS There was another reason for the timing of our sale. A lot of new merchandise comes out in August and September. That’s a typical cycle for fourth-quarter retail. By having our sale in July, we cleared space just in time for the new merchandise to arrive.

2 comments

  1. Kristi Magy says:

    The Summer Fun Sale was an annual pilgrimage for our family, but we hope we were known as one of your Relational customers. Typically, even though we came out for the Summer Fun Sale, the bulk of our purchases that day would be on full priced merchandise that we liked better. I would always comb over the clearanced items several times, but more often than not, we’d only snag one or two discounted items and a bag full of regularly priced toys. At the last Summer Fun Sale, we snagged two Melissa & Doug play castles (like mini-doll houses) to stow away until Chanukah and birthdays because they were half off, but we also grabbed puzzles, another Tenzi to give as a gift, and a few books.

    Toys R’ Us could have learned from you in so many ways before they went under, and this topic is no difference. They’re literally “going out of business” and the Jackson store still has merchandise on the shelves that hasn’t hit 50% off yet. I went in and looked around, but didn’t buy a thing. 😛

    • Phil Wrzesinski says:

      Kristi,

      Many of our regular Relational Customers were also Summer Fun Sale shoppers. Relational Customers like deals, too, because we are all both Transactional and Relational in our shopping habits. That was also one of the reasons I preferred the big sale to the clearance section. I didn’t want to turn my RC’s into TC’s too often.

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