Sarah advises boutique retailers to mark down aging inventory sooner rather than later. She recommends doing the math on bigger, earlier discounts like 50% off to free up cash and refresh stock, rather than waiting with slow incremental markdowns that tie up money and hurt morale.
Hey guys, it's Sarah. I'm back from the boutique hub to answer yet again another one of our frequently asked questions. And that is how to move out old inventory and when should I put it on sale. Well, guys, I just wanted to come to you quick and talk about a scenario that I'm seeing happening. A lot. I'm seeing with the supply chains and the delivery rates, everything's a little bit slower getting to you, but then it falls on you to try to sell it quickly right before that inventory's life cycle expires. What is happening is a lot of times our stores are tying up their cash in this inventory that they allowed to come into their store late, but the customers are already moving on and they're thinking fast forward fashion is in advance, right, everybody? All the shoppers are thinking months ahead of time. They're not ever thinking behind. So some of those winter sweaters perhaps that you arrived in right before Christmas that you did not have a full sell through, now they're aging on your racks and what do you do? You're trying to decide, do I take a big discount on them now and move them out for the cash I can get out of them now or do I slowly trickle out discounts and hope that they sell over time? Well, guys, I just want to come to you and say do the math on this. We've ran the numbers on a number of different scenarios and I urge you to do the same thing. Look at what you still have remaining in that type of a classification that's pretty age aged or time sensitive items and look and see, what if I just ran that at 50% off, did a big sale on that now hit it hard and moved it out and took the cash I could take to the bank, reinvest it in other inventory versus those slower markdown strategies of that 30, 60, 90, 120 days type of markdown strategy. Look to see where you'd be at profitably, assuming that you're going to sell another maybe say 10% of that item over time in the next month, another 10% later on on the next markdown. Potentially maybe you'd be selling 20% of it at a time, but the truth is the longer it waits there, the less desirable it is to your customer. So the less of it you're going to sell during a given period of time until you take a bigger markdown. So please do the math of it on your own. But look at those numbers and compare. What is that dollar worth to me today, if I could get it today and Turn around and reinvest it. There's an opportunity waiting for you there versus holding out, waiting, hoping it sells for maybe not as big of a discount. Over time, I think you're going to find out that taking that discount now, moving that out and freeing that cash up is better for your business. And not only is it better for your business, cash wise, mentally, morale wise, energy wise, seeing those things gone off your floor, off your website so you can get something new and vibrant and energetic to excite your customers and your staff, I think will help you out in the long run, too. So that's my tip to you today. It depends on who you are, where you are, what your store is, who your customer is, where you're located, all those things. However, cash is cash. You cannot spend inventory. So if you're thinking about taking some markdowns, take markdowns that'll make that item move now. Now is better than later. All right, guys, we'll be back from the boutique hub, answering more of your frequently asked questions. If you like what you hear, let us know. If you have questions, please email us, Let us drop in, drop us a note. You can find us at thebotichub. Com. We'll talk to you later.
