Stock Slow Sellers Which Reassure Customers

A while back, researchers at University of Pennsylvania and McGill University were taken by the story behind the bankruptcy of grocery retailer Super Fresh. A contributing factor, so goes the story, was the retailer eliminating certain slow sellers from the shelves. By the time the retailer realized how important those deleted items were to the shoppers, those shoppers had taken their habitual business elsewhere.
     How could this be? A profitability maxim for the small to midsize retailer is, “Don’t fall in love with your inventory.” Turn your slow sellers into cash, it’s said. If necessary, lower the selling price to below what you originally paid for it. Free up the shelf space and the money so you can use it on high turnover merchandise.
     But with Super Fresh, those slow-selling items were serving a function other than making money on their own. They were reassuring customers that, if they needed the items, this was the place to go for them. You might be carrying items with very low turnover because stocking these items lets customers know you carry a complete set. The buy-it-once-in-a-lifetime fasteners are on the shelf because your store is known for carrying whatever-you-need-in-your-lifetime fasteners.
     When you identify a slow-seller candidate for elimination, ask questions:

• “In the consumers’ minds, is this part of a set, such that if I eliminate the item, it will look like I no longer carry a complete line?” If so, consider how significant sales of that line are to your profitability. If it’s not much, go ahead to purge the slow-seller. 
• “Is there another item I carry which can serve well as a substitute?” If so, there’s low risk to your profitability in no longer stocking the slow seller. The Pennsylvania/McGill researchers give the example of a shopper who comes in looking for a dress in a certain style and size and prefers to buy a red one, but is satisfied with a blue one. 
• “If I stop carrying the item, could I take special orders with a delivery time acceptable to customers?” If so, a sign in place of the item might reassure customers you’re still the store of choice. 
• “How high can I set the price without it appearing that I’m aiming to gouge people?” Most of your customers won’t be shopping for the item, so they’re less price sensitive Those who do buy the slow-seller are paying for convenience. 

Click below for more: 
Cut Back on Stocking Unprofitable Products 
Set Higher Margins on Low Velocity Items