Merchandising Best Practice: Cheap Inventory

Different-Brands-Of-Laundry-DetergentEvery retailer asks the same question: How can they have a store that looks full during low sales periods without harming inventory turn? Those big box stores of the 1990’s are looking like real estate liabilities from February to October.  Customers worry about their store’s longevity when they see empty shelves.   Oversized graphics to take up space are expensive.

Take a page from a national retailer who is evaluated the cost of inventory against the cost of graphic “fillers” and decided to fill the bottom shelves of its aisles with a cheap – but colorful – national bleach brand (hint: it rhymes with Blorox Bleach)  For less than a dollar it stocks a product that:

1) Makes a good impression on customers. It is a national brand with clean packaging and is easy to fill shelves with its 1 gallon bottle.

2) Does not expire.  The product could sit on shelves for months or years and still be efficacious and attractive to customers.

3) Sells at a steady rate. The sales history makes forecasting easy for everyday turn and it can sell down in the future at a predictable pace when space is once again at a premium.

Consider looking at your product mix.  Is there product that is relatively inexpensive that you can use to fill up shelf space in the off season?  Paper reams, apparel basics, bedding and towels comes to mind.  For this to work, offer amnesty to your merchants and inventory teams who are typically measured on inventory productivity. Also, take your selected vendor as a partner so that your initial purchase does not surprise their supply chain or create an expectation for unnatural replenishment levels.

This is not a standard retail practice.  And I cannot imagine why not.  Oh yeah, I can.  Merchants who are rewarded to be  more concerned with their category performance than the entire store. There’s only 2 things needed to fix that: creativity and leadership.

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