When the temperatures are dropping and the leaves are starting to fall, it can only mean one thing. Summer, a favorite season for many people, is drawing to a close. As a retailer, this means you have some assessing to do: How did your summer merchandise sell? How much back stock do you have? Can items be sold full-price next year? Or should you set up a summer clearance event?
Many stores choose to sell their seasonal SKUs for a reduced price during a summer's end event. While this will be popular with your customers, it's important that you still make money on the leftover merchandise. Here are a few tips that will help you make a profit during your clearance event.
Sometimes your merchandise isn't selling the way you anticipated because the price isn't right for your shoppers. Maybe a competitor is offering a similar product at a lower price or customers can find the goods online. When you have a surplus of seasonal items to get rid of, you may be tempted to slash the prices and hope for the best. However, your end-of-season sale should employ carefully researched prices.
"Research ideal price ranges for your products."
Try to figure out what your customers are willing to pay for your sale items. For example, you may have priced a specialty beach towel at $20, but consumers are only willing to pay $15. Use this information to mark down your goods. Cut the price back to what shoppers want to spend – or a little further if you have a large inventory to move.
While this strategy will likely take some time and research to successfully implement, it will ensure that your margins are as large as possible and that your end-of-quarter sales are as close to your goal as they can be.
Employ psychological pricing
If you've never read up on the tricks of pricing merchandise, now is a good time! Research has shown that certain pricing tactics will encourage more sales. Here are two that you can use during your summer clearance:
- The left-digit effect: People read left to right, so you want the left digits of price tags to be as low as possible. In the minds of consumers, something priced as $19.99 is a much better deal than an item that's $20. It's just a one cent difference, but the mind trick can encourage shoppers to be a little looser with their purse strings.
- Magic No. 9: For some reason, consumers really like prices that end in nine. Whether it's $0.99 or $99, people are more apt to pick up products with this digit in the tag. Use this to your advantage – lower your $40 items to $39 and watch them fly out of your display cases.
Try bundling items
Another smart discounting strategy is bundling complementary items. This is a great option if you have a lot of leftover summer gear – instead of selling beach bags and towels separately, you can lump them together to make the purchase more appealing to customers.
Using this method, you can often clear out two types of merchandise with one sale! Rather than buying a pair of flip-flops for a discount, your shoppers will leave with shoes and a new hat. This will put a significant dent in your back stock while bringing in the most money for your store.
However, the key to bundling is to offer an option to buy each piece separately. Forbes magazine explained that shoppers view bundles less favorably when purchasing both items is their only option. Keep this in mind as you create pairing strategies.