Friday, April 8, 2011

When Bunnies Multiply

Easter is coming.

If you're a store full of seasonal merchandise there are bunnies sprouting up everywhere you turn. And just like the real critters, they tend to multiply at a rate faster than expected.

When Bunnies Go Wild
And in 17 days you'll have a dilemma... what to do with all of the Easter Bunnies that didn't find their way into someone's heart and home.

Your first thought is usually, "Well, they're paid for, might as well keep 'em and sell 'em next year. I'm gonna need bunnies next year anyway." That was always my first thought. Plus, we have a large enough warehouse that no one was going to care about a small box of Easter leftovers.

Get over that thought. There is a better thought to have...

"Yes, I paid for them. I want my money back!"

When the season ends, the smartest thing you can do with your leftover seasonal merchandise is mark it down and try to turn it into cash.

Four Ways to Better Cash Flow
First, it helps put money into your pockets for buying other (more profitable) merchandise. Throwing it in a box until next season just means you have fewer dollars available for merchandise right now when you really need it.

Second, if you have leftovers, part of the reason is that you bought too much, but even more likely, you bought the wrong stuff. If it didn't sell this season, it isn't selling next season. Cut your losses and move on.

Third, even though Easter happens every year, the product mix available for the season and your store's mix both change frequently. Maybe you'll find an even cuter bunny, or maybe you'll decide chicks are the way to go, or maybe you'll decide that you'll sit out the next season. If you're holding merchandise from the previous year, you are less capable of making those choices.

And finally, your financial numbers will improve. If you are measuring your Gross Margin Return on Inventory (if you aren't, you should!) then you know that part of the equation is keeping your inventory levels lean and tight. Holding merchandise that isn't selling costs you money.

Hare Today Gone Tomorrow
So for the next couple weeks, sell your Easter goods to the best of your ability. Make your margins and move on. But if April 25 arrives and you still have plenty of bunnies, give those hares their marching orders.

-Phil

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