Creating promotions to get rid of inventory which sells slow is a part of any retailers job, however, many stores often wait until the last moment and use markdowns as their sales strategy. While having seasonal markdowns is an effective sales strategy, it can leave a big impact on the store’s gross margins and profitability. Let’s overview some of the sales strategies which should be implemented before the season ends.
Gift with purchase is one of the most effective sales strategies as customers enjoy getting free items. It’s a win-win situation for the customer and the business, because you’re getting rid of the inventory that doesn’t sell and your customer is practically getting a reward for shopping. For example, if a store is selling smartphones, offer a free case with purchase. Why is that effective? Unlike clothing and beauty products, where the retailer sets the price based on what they think is appropriate, smartphones have a very small price difference when compared to other stores. New smartphones are being released every other month and phone cases quickly go obsolete. This is an effective way to get rid of that dusty inventory and have a competitive advantage. This strategy should be executed shortly after launching the new product.
Buy-one-get-one-free or commonly addressed as BOGO is one of the customer favorites. This strategy can be used by offering two items and getting the third one for free or offering to reduce the price when buying in large quantities. This strategy is extremely convenient for items of daily use. For example, if a regular pair of socks is 2 euros, then offer 5 pairs of socks for 7 euros. This strategy is good for your store because you can choose how much you want to affect the gross margins. A BOGO deal is almost like a season’s sale offer, because the customer gets more value for less. This strategy can be implemented in the beginning of the season to differentiate your store from the competitors or mid-season to get rid of the slow moving inventory.
Offering discounts is a great way to bring new customers to the store. Depending on your product variety, choose a target group which is likely to shop at your store. For example, multiple apparel companies have introduced a promotion to offer a 10% discount for students, while grocery stores have a special discount for senior citizens on a particular weekday or hour. Why does it work? This sales strategy is successful because it seems as if it’s a tailored offer. Multiple stores in all categories have started to also offer a special birthday discount, because customers spend more when they’re celebrating. This is a good strategy to have at your store all year round.
Markdown means giving an item a permanent price reduction, because it’s either selling too slow or not selling at all. The difference between a markdown and a discount is that the discount applies to all items in the store which match the criteria, for example, hold a valid student ID, however, markdowns are chosen by the retailer. In that way, you control which items are being sold. No one wants to buy a pair of shorts with snow outside the window, which means that they’ll be purchased only in the case of a very attractive price. Markdowns are a last resort and should be implemented for the slowest selling inventory during mid season or at the end of the season to get rid of inventory. They also hold the smallest gross margin.
It is important to implement sales strategies on time to get the best gross margins on your products. Sales strategies can give retailers a competitive advantage, especially if similar items are available at multiple stores. A retail point of sale system should be your partner in implementing sales strategies. For example, Lightspeed Retail POS system gives access to immediately change price and include new offers. The retail point of sale system is easy to use no matter of your experience, allowing you to focus on generating sales, not spending hours on inputting data. Reach out to Progressive, the exclusive Lightspeed Retail POS system’s representative in Malta, to find out more.
Great news! The Lightspeed Retail point of sale system’s mobile application is now available in Malta.
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