How to sell product balances in a crisis
18.08.2015 26722

How to sell product balances in a crisis

Timely maneuver

With the appearance of commodity residues, you must act quickly, without "overexposing" them in stock

When sales volumes are shrinking and prospects are not quite clear, it is important to avoid overstocking and large balances in your warehouse, our experts are sure. “Leftovers are sweet” are only for large discounters who will be able to pick up the leftovers from retail at very bargain prices and make good money on it. On the other hand, the market now presents such surprises that “the remnants will soon be more expensive than money,” some distributors are sure. At some point, the retailer may not have available funds or a loan to purchase a new collection, and the store still needs the goods - so that there are sales, turnover and profit. And the leftovers in such a situation suddenly become desirable, helping to keep the business afloat.

Any crisis, even a deep and long one, has one remarkable property - it must end. In the meantime, he goes, the business tries to optimize and discipline himself as much as possible. Take, for example, purchases in Europe, where we were especially loved, because we always took a lot and without bargaining. Now, thanks to the crisis, sobering has come, and the purchases of Russian entrepreneurs are becoming much more calculated. Suppliers have already realized that lean years have replaced fat years, and are ready to cooperate on new conditions. For many well-known brands, the Russian market remains too important and promising to leave because of a temporary recession. In a number of cases, factories, with the formation of excess balances, are ready to compensate for losses due to future deliveries, since long-term partnership is a priority for them. 

Require supplier to meet delivery deadlines

Different trading companies have different opportunities, economic conditions and business settings, but for all, without exception, there is a strict rule: "Sales lost today are lost forever." If the supply of shoes for one reason or another is delayed by the beginning of the new season, the consumer will not wait - the demand will be redistributed to the products of other players. Delayed goods can only be sold at a large discount during the sales season, but the effectiveness of this approach is questionable. Therefore, by hook or by crook, require the supplier to comply with the delivery time, because under the current conditions, any delay can result in serious financial losses.

Explore customer preferences

Timeliness is one, but not the only condition that avoids the formation of excess residuals. It is necessary to monitor trends, study consumer preferences, take into account the decrease in solvent demand. Now the trend is not designer refinements, but classic comfortable shoes. Many people are accustomed to high-quality shoes, and even in the current conditions they will not switch to a cheap leather substitute - rather, frugality is expressed in the fact that they will buy not two or three pairs, but one, but still high-quality. Those who love fashion, style and relevance, too, will not give up their addictions. And when the store tries to give out the remnants of the new collection, the buyer will immediately see it, draw conclusions and permanently delete the store from its list. If you properly take into account all the current market features and changing consumer preferences at the planning and contracting stages with suppliers, you can reduce the risk of large balances.

Do not get carried away with discounts

There are showrooms that bring goods in fractional, small batches, strictly on order, and thanks to this form of work, they do not experience any headache with leftovers. But these are exceptions. The overwhelming majority of companies import large consignments of goods and, in one way or another, must provide sales. Since the market is very mobile today, many shoe retailers are forced to abandon annual planning and switch to quarterly, at best. A well-thought-out pricing policy is very important for confident sales. When the ruble fell, some market players could not stand their nerves, and they inflated prices, but then quickly came to their senses and began to knock them down - already under the guise of sales. In general, now there are a lot of sales, discounts, promotions, but when there are too many of them, a negative effect appears: “sales” disorient the buyer, spoil the average bill, and knock down the sale of a new collection. A more reasonable approach, albeit more difficult to implement, would be complex optimization measures that allow keeping the price growth at about 15-20% compared to last year. Such optimization necessarily involves making a painful decision to reduce the trading margin and own margin.

Work on leftovers

If, nevertheless, balances have appeared, then it is necessary to determine the degree of their liquidity and act. It is important not to “overexpose” the leftovers. For each model, the approach should be individual. Trendy models that fall into the trend for one season should be discounted and said goodbye to them in the near future, since in the foreseeable future they will be of little interest to anyone. The implementation of basic and classic models can be extended for several seasons, but do not apply the galloping discount scenario to them, when during the sale the model is sold at a 70% discount, and at the beginning of the new season the price returns to the previous level - this is wrong and causes negative feelings at the buyer.

When a decision on liquidation of balances is made in principle, the companies begin to make calculations, which can take into account the payback of the purchase and the payback ratio, the actual mark-up, inventory turnover, the amount of forecasted balances at the end of the season and other criteria. Some sellers will be more interested in the rate of liquidation, while others will be interested in price and margin. Someone has their own discount centers and online stores, someone's choice is limited to a massive sale or transfer of balances for sale to stock networks. Various combinations are possible, which depend on many circumstances: the volume and age of the residues, the quality of the shoes, the season, the deadlines, the qualifications of negotiators, the level of trust between partners. No matter how successful the company is, as a result, with the leftovers, it will be a useful experience and a good lesson for the future. The balances have the right to exist at all times, since we are talking about the most complete assortment satisfaction of the buyer, but their volumes should not exceed reasonable limits, since we are talking about the financial well-being of the company.

Natalya Merinova

With the appearance of commodity residues, you must act quickly, without "overexposing" them in stock
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