Retail Margins: Dialing for Dollars. Retail markdown money.
This is the third and final episode in a series of episodes designed to help independent retailers improve cash flow and gross profits by managing inventory more efficiently. Cash flow is the lifeblood of any business, for independent retailers cash flow management can be the make or break. Geared toward Fashion retailers, this series can be applied to many brick-and-mortar businesses.
Dialing for Dollars. Retail markdown money.
Welcome to Material Retail Dumps episode 4. My name is Elliot and I’m very excited to be the host today. This is the third and final episode in our gross margin series. In this episode, we will talk about how you can improve cash flow and gross margins using markdown money. If you haven’t listened to the first 2 episodes in this series, I suggest doing so as it will put a lot of this into context.
This episode and the execution of these ideas may be a bit uncomfortable for some. But, you know the saying, no pain no gain.
So let’s get to it, what are we talking about?
Very simple, when you have a bad style, you know that you need to mark it down quickly and aggressively. So now that we’ve marked the item down and are looking to get our money back as quickly as possible, let’s take another route towards recouping the money.
Pick up the phone, call your sales rep to explain to them that this style is not working for you and politely ask them if you can return the style. They will very likely say no, guess what, that was the plan. Now you can pleasently accept the no on the return and ask them to discount the item after the fact. So say you bought the item 6 pieces of the item for $20 each, maybe they give you $4 for each item. That’s $24, that phone call likely took 3 minutes.
If you haven’t paid for the item yet, you’ll just pay less when paying the invoice. If you have paid for the item already, just ask for a credit on the next purchase.
4 Tips to make it work.
1 - Don’t be shy - This is business, as a customer you are expecting your vendors to provide quality styles that will perform in your store. I am sure the sales rep was not shy in telling you how great the jacket you bought was performing when she came to make the sale.
2 - Don’t be mean - You need to keep the relationship strong, everyone needs to be respectful. You are simply coming as a buyer, explaining that the item you bought is not selling and you need help getting rid of it.
3 - Make sure to ask for a return first - It’s best to just get rid of the item and return it. Most vendors will reject you. That’s okay, once they say no, they already feel bad for you, now they will be more likely to give you money off.
4 - Be careful not to keep going to the same vendor over and over - 2 reasons,
A - They’ll get sick of you
B - If you need to keep asking them for markdown money because their products don’t sell, you should probably just stop buying from them.
Well, that’s it for today, thanks for listening! I am very excited about next week, we will discuss branding with a very special guest.