As a small, seasonal retailer how can I better manage end of season clearance?

With Christmas around the corner many retailers have their fingers crossed that they will sell through of their Winter seasonal merchandise in order to launch their Spring ranges with no New Year hang-overs… but in reality most retailers don’t manage to sell through and are left with stock to shift.

One of my clients recently posed this question: “When it comes to the end of season I am never sure by what amount to reduce the end of season items in order to clear them from stock without losing too much margin.

Selling through too fast to avoid gaps on my shelves before I can merchandise the new product but also not being left with loads of stock when I am ready to merchandise next season. Are there any ways I can better manage end of season clearance?”

As this is a common problem I wanted to share the answer in order to enable as many retailers as possible to take advantage of these ideas at this critical time of year.

1. Look at price elasticity for your product portfolio

There is a method that is based on price elasticity that enables you to analyse the uplift in sales based on reduction in price – of course if your data is based on past products it is never exact as no matter how similar products are this season compared to last the consumer buying behaviour will vary, and is influenced by external factors…

As a rule you should assess the amount of stock you must clear, what it “owes” you (as in what cash do you want to recover from the stock – cost, more than cost, less than cost etc) and over what time period you are planning to run the clearance event.

If you have little stock to clear and time to clear it you might consider reducing by just 10-20%, or even including a more of a promotional activity than a clearance event e.g. buy 1 get something else for a special price…

Of course, if you have more product and reasonable time to run an end of season event then the traditional approach is to start with reductions of say 30%, increasing to 50% as you reach the end of the period allocated for clearance, and finally in the last few days, when very limited stock remains, marking down items to as low as 70% off – the speed of sell through and the discounts you apply will be dependent on your product, pricing and your customers’ likelihood to respond to such activity of course.

2. Consider dedicated clearance channels – eBay for example…

Finally, and something that is becoming increasingly popular, is the use of dedicated clearance channels. This is particularly beneficial if you have a larger amount of stock to clear, and it owes you more cash than you think you’d recover in traditional clearance through the store there are creative alternatives.

Many retailers, including the major multiples, are leveraging the phenomenal traffic on eBay to create a clearance channel. If you can remove the old stock from the store and sell through eBay you may recover more margin than via store based clearance events and you will get the opportunity to completely remerchandise the whole store literally over night, giving you a very clean seasonal transition as well as very effectively addressing the issue of clearing end of season stock.

How well you start the next season depends on how well you closed the last…

For a seasonal retailer transitioning from one seasonal range to the next is always painful! There are the cash flow implications of buying the forthcoming season stock ahead of any real insight as to what the sales might be. Beyond that to really impress the customer you practically have to switch off one layout at the close of business one day and when you open the following day, hey presto, the new range is presented in all it’s glory!

This isn’t a problem unique to the smaller retailers however, the major multiples also really grapple with how to clear their end of season stock at the right velocity in time to launch the incoming range. Often it doesn’t go to plan and shelves can look bare too quickly or stock won’t sell through! The multiples can over come this by linking SKUs for replenishment, meaning that as an older line clears their systems automatically order stock of the replacement line into store. Of course an SME doesn’t have such a sophisticated set of systems…

Let me know if you would like to discuss this further…

I’d be happy to share some thoughts about how SME retailers can better manage clearance, please  give me a shout if you’d like to know more – I can either take you through that off line, 1-2-1, or, if enough people seem to want some more details then I can always do a follow up article with more details about approaches to better managing the end of season activities!

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About Clare Bailey

Clare Bailey, The Retail Champion (formerly Clare Rayner), is one of the most well-known and respected retail experts in the UK. With unrivalled knowledge in retail, high streets and consumer matters, she offers unbiased, independent content – whether engaged as a professional speaker, for broadcast media, or for a written feature. Clare is a business woman, entrepreneur and founder of several small businesses. Having been born into a family of successful business owners, it was inevitable that she’d eventually jump off the corporate treadmill and step out on her own! Today her brand portfolio includes The Retail Champion, The Retail Conference, the Future High Street Summit and the Support for Independent Retail campaign. In addition, she is co-founder of Mobaro Retail UK and a non-exec director of Beed Virtual Assistant Services. Having started her career as a fast-track store management trainee for McDonalds, she went on to work with leading retailers such as M&S, Dixons and Argos. She moved swiftly into management roles before being headhunted into senior consulting roles with global software giant SAP, and international management consulting brand, Accenture. Her corporate background in senior retail, consulting and technology roles, coupled with her experience of creating and running her own business, has enabled her to be equally capable whether consulting to global brands or micro businesses. This unique blend has not only positioned her as a leading expert in all things retail, but has enabled her to add meaningful commentary and insight to the debate around the future of the high street, and, how technology is driving fundamental change in the way consumers, and businesses, interact. Clare has become an influential voice in her field, which has resulted in her becoming a regular media contributor and sought-after conference speaker. Often seen on Good Morning Britain, BBC Breakfast, Sky News, and Chanel 5 (to name a few), Clare speaks on a myriad of retail, high street and consumer issues – but is particular adept when it comes to explaining the context behind retail trading results, newly released data, and government stats, in a palatable and informative manner. In addition to broadcast and conference speaking, Clare is the proud author of two best-selling business books published by Kogan Page - The Retail Champion: 10 Steps to Retail Success, published July 2012 and How to Sell to Retail: The Secrets of Getting Your Product to Market, published February 2013. She has provided contributions to various academic texts, including Retail Marketing Management (published by Pearson). With an engaging, conversational yet informative style, Clare writes for press and content agencies, providing features, articles, blogs and opinion pieces as well as contributions to white papers and reports. However, when the situation demands a more serious style, Clare can deliver - In 2016 she wrote an extensive report for a major insurance and risk law firm, as a retail expert witness, to support a public liability suit. She found that project particularly enjoyable as it played well to her strengths – assimilating large amounts of data and information, identifying the key points and articulating that in an understandable manner. When not on TV or speaking at conferences, Clare’s “day job” sees her supporting consumer-facing businesses through her consultancy services. When asked to describe what she most loves about retail consulting it is typically the opportunity to “dig deep”, getting “under the bonnet”, in order to leverage the business data to uncover the insights that lead to “lightbulb moments”. She also loves working on business change programmes that centre on improving the processes and systems to increase profitability by supporting more rapid, better informed decision making, improving the customer experience, or simply by become more efficient and streamlined. In this respect she considers herself a “business engineer” with a brain that works like a relational database! Due to her years of experience, her logical, objective approach, her quick, rational thinking, she is known for being able to cut through complexity, seeing right through to the crux of issues, finding creative solutions that others may have overlooked. As if all that wasn’t enough, Clare is a working mum, juggling a home life in rural Lincolnshire with her partner, their 5 kids, 4 cats, and geriatric Labrador! For all enquiries, contact Clare directly on 01727 238890 or email champion@retailchampion.co.uk.
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2 Responses to As a small, seasonal retailer how can I better manage end of season clearance?

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