If you are like many retailers right now, your warehouse spaces are probably bursting at the seams. Even if you are not over-inventoried “on paper”, deferred or delayed orders are arriving just as consumer demand starts to slow down, and you have nowhere to put it. Does this scenario sound familiar?
What can you do? The one thing you should NOT do is start widespread discounting to move product or your margins will collapse. And NEVER discount best sellers. We have never understood why people do that.
These past two years have been particularly challenging for the home furnishings industry. Retailers have worked too hard during the last two years to finally raise margins to where they always should have been, and where they need to be.
When you’re planning your next promotion, avoid huge storewide discounts unless you’re just doing it for a one-to-three-day period. A more profitable way to proceed is to highlight “Huge Savings in Every Department” rather than providing savings on every single item in the store.
If you need to highlight savings on a particular line, contact the vendor. It’s worth the time to contact the vendor to see if they will participate, whether it be through cost rebates or co-op reimbursement. And don’t forget spiffs! Profitability Consulting Group has always been a big proponent of spiffs to help move product in your store.
As business eases, margins will be the key to profitability and guess what? They always have been!
Need help becoming profitable? Contact Profitability Consulting Group via email or call us at 404-432-2137!
