PERSPECTIVES

For most retailers, especially this year, reducing inventory is priority #1. With talk of a 2023 recession still in the air, lingering inflation driving up costs, and rising interest rates, cash is definitely king this year.

Time to revisit your year-end strategies for meeting your targeted ending inventory on December 31. If you are like many retailers this year, with plenty of merchandise in your stores, you know the challenge:  how best to turn that inventory into cash? Quickly! Especially without looking like a distressed merchant.

Here's one answer for how to do that. Focus on improving the productivity of each shopper who comes to your store. That is, increase the IPTs (Items Per Transaction.) Make it easier, more compelling and more fun for them to buy more items from you. 

Each year at this time, our thoughts turn to turkeys. 

No, not the ones that will adorn many dining tables on Thursday. But the "turkeys" lurking amidst your inventory. You know; non-selling, distressed, slow-moving, old, unappealing leftovers among your merchandise. 

But this year, frankly, our worries extend beyond the turkeys. 

Here are some of the reasons why.

• All the gloom and doom talk about the economy and recession continues, affecting consumer attitudes.


• With few pandemic or supply chain issues, many retailers have more-than-ample inventory this year, unlike the previous two years.


• Inflation is impossible to ignore, especially for those who drive cars or shop for groceries.

 

As a result, in this environment, consumers are scaling back their discretionary purchases, and/or choosing to spend on travel, dining out, or other experiences versus retail merchandise. 

Not an upbeat prospect for retailers, is it?

Except for the lingering sugar high, Halloween is soon to be behind us. Retailers know what that means: on to the Holiday Season!

Of course, for most retailers that brings a major focus on sales. 

But, savvy retailers are focused especially on the targeted ending inventory on December 31. Those retailers are carefully watching sales reports, and are poised for action. 

• Each week, they identify "What's not selling yet?" And they do something about it! Move it around on the floor? Display it differently? Pair it with merchandise that IS selling? Lots of choices. 

You've seen all the headlines. Worldwide inflation. Dire warnings of a coming recession. Big time discounts at retailers due to boatloads of inventory. Amazon doubling down on their Prime Day(s) sales. Shoppers shopping early in anticipation of rising prices. 

Shaping up to be yet another "unprecedented" Holiday season for retailers, isn't it?

And a wonderful opportunity for all merchants!

How best to start? Set the boundaries.

• First, specify how much inventory, in total, you want as of December 31. 
• How much by department?
• Category?

Next, establish clear routines for monitoring inventory levels.

Consider these front-page headlines and the accompanying chart (see above) from the June 6 Wall Street Journal* – "Surplus Inventory Piles Up", "Stores Are Stuck with the Wrong Items." 

Look at it carefully, and think of your operation in comparison. How do your numbers compare? Are you as shocked as we are?

How did this happen? 

Partly as responses to the unprecedented impacts of the pandemic. 

The playing field has shifted dramatically under the feet of retailers. 

Merchandise orders placed months ago are now proving to be "too much stuff that consumers no longer want so much of,"  as was reported rather colloquially just 3 days ago.  All this was summed up this way: "Retailers with slower inventory turns might find current conditions especially difficult to navigate." *

Now, look at the chart at the top of the page. Without being dramatic, it may be a lifesaver for your business this year. 

"And the award goes to..."

No, Not About People This Time 
While we typically think of people as recipients of recognition – and we trust you already are doing that, right? –  this is a different challenge.

Ready? Here we go! Of your merchandise, which products are Award Winners?!