Getting into the off-price retail game is a process that has proved to be lucrative for companies looking to offload their excess inventory. Consumer behavior has been conditioned towards the purchase of discounted merchandise, which is good news for businesses looking to expand into another segment of the market. However, while the customer base is ripe for product, not every company is fully equipped to supply that demand.
Off-price presents a huge opportunity to increase profit margins, if executed correctly. It is crucial for companies to look to other brands succeeding in the off-price space to identify and understand which practices will lead to success. Brands today are empowered by emerging technologies to analyze excess supply and understand areas of opportunities in strategic sales planning. At INTURN, we’ve partnered with companies who have leveraged off-price to work for them. Here are some of the habits of highly successful off-price sellers:
1. Gather Data and Know Your Inventory
It may seem obvious, but knowing how much product you have in stock is vital in off-price retail. Having clear, up-to-date information on which products you are looking to sell, as well as their respective quantity and pricing, is important when negotiating deals with multiple buyers. This is especially true if what you’re selling has an expiration date. By updating your records to reflect any purchases made, you will ensure that what is being offered to the buyer is reflected in the inventory you have.
Once you have an accurate picture of what inventory you have to sell, the next step is knowing when exactly to make the sale. People tend to buy seasonally, so if your business is looking to unload parkas and snow boots it may be more prudent to wait until after the summer, just as someone with an excess of shorts and T-shirts should wait until the weather warms up before brokering a deal. It’s also important to note who your customer base is for certain products, as it will have an effect on which retailers you sell to. If you are selling sports equipment and your buyer caters to a more fashion-focused clientele, that is probably not the right fit, so researching to find buyers with an audience that lines up with your product is key.
2. Be Prepared to Negotiate
Traditionally, retailers are at a greater advantage in the off-price marketplace due to the seller’s urgent need to recoup profits lost from excess inventory. As sellers become more and more pressed for time, retailers can use this to drive down prices, which is why being in a position to effectively negotiate is key. Researching your buyers to see how their prices compare to their competition, and using the historical data you’ve gathered to back up your offer are just a couple ways to put your business in a better position to make the sale on your terms.
3. Strategize the Next Sale
Selling and buying excess inventory has largely been a manual process since its inception, but it is far from the most efficient way to operate. Brands are often focused on offloading as much excess stock as possible, as quickly as possible, missing an opportunity to collect transaction data and use those actionable insights to make smarter offers going forward. Recency and frequency of purchases, for example, are metrics that can be leveraged by sellers in order to more accurately decide which products will sell best, and when, and with which retailer. While this may sound like extra work, there are new technological solutions that can be utilized to provide your company with vital information.
These habits alone are not all of what it takes to excel in the off-price market, but implementing these strategies will put you on the path to success.
Navigating the off-price landscape can be difficult without the right tools. At INTURN, we provide brands with the opportunity to streamline their workflows, cut down on transaction times, and increase margins by up to 85%. Interested? Learn more.