The holiday season is over and peak season for returns is upon us, eating up space and driving down those hard-earned profit dollars. Holiday-themed inventory and now-outdated gift items are taken off the shelves and are yet more reminders that you’ve entered the not-so-jolly time of year: holiday hangover time. Instead of letting this excess and transitioning inventory get you down, roll up your sleeves and get creative about what to do with these products. Follow these tips to make January 2020 a great start to a new decade and bring up that profit margin.
First, make sure you regain store-level inventory integrity.
Before anything else, you need to know what inventory you have on hand. This time of year is more complicated because of the massive amount of returns that pour through the door every day.
Check those processes that can affect inventory counts. Too often a simple error in a process or system gets overlooked and skews the true count. Check to make sure that you’re error-free in the following systems:
- Receiving – are your shipments reaching the retailer? What about your items that customers return to the retailer?
- Backstocking – how are your products faring in the back room? Are all items accounted for?
- Point of Sale – Are products scanning correctly and accurately at the register. Check your margins as they can be an indicator of POS gone wrong.
- The Retailer’s Inventory Audits – When did the retailer last take physical count of your inventory and what is the cadence for the next count?
Read our article on Phantom Inventory to learn more about how to prevent it.
Next, embrace the return process and improve it.
Once you feel good about the state of your inventory, it’s time to check on the return process. How do customers return your items? Of course, you hope it never happens but sooner or later it will. Returns can be tricky because you may not have control over your customer’s experience as they usually return it to the retailer from which they purchased the item. Unfortunately, if they have a bad experience with that retailer, they may associate it with your brand too. Post-holidays are a perfect time to examine the return process as 25% of all returns take place after the winter holiday rush.
Here are a few tips to make it a surprisingly enjoyable experience and build customer loyalty.
When Returns Come Back to You
If you allow customers to return items directly to you, maximize that opportunity. Make it easy by offering free shipping on returns, suggest personalized recommendations as appropriate, and don’t forget to thank them for their time and purchase.
- Make it Easy – Don’t hide your return policy in the depths of your website or make your customers call multiple people to figure it out. Make it as simple as clicking a button or two and printing a shipping label. Bonus points if you can offer free or discounted shipping.
- Express Gratitude – Even if they’re returning a purchase, your customer still spent time and money on it. Show them that you recognize that with a simple “thank you” page that pops up on your website or a follow-up email.
- Survey Time! – Use this return as an opportunity to learn why the customer is returning the item. A quick survey that asks them “why?” can shed light on your customers’ behavior.
- Personalized Recommendations – As part of your follow-up communications during the return process, often through email, add in personalized recommendations. Consider adding verbiage like “We’re sorry your purchase didn’t work out for you but we think you may be interested in this other item!” Adding an incentive like a 10% off your next purchase can also be a great way to continue to build customer loyalty at the point of a returned item.
Online to the Retailer
What is the online return experience like at the retailer? Make sure you go through it as a customer would. Do you feel listened to or frustrated? Doing a simple test can help you better understand your own customers’ return experience. Make notes of what you didn’t like or opportunities you see for improvement and pitch it to the retailer. While they’re not likely to implement a huge change, adding a simple message like a “thank you” email or page is pretty painless and can help not just you but their store as well.
In-Store at the Retailer
Like the online returns, try standing in line at your retail partner to understand what your customers experience. Make suggestions as appropriate to the retailer. Helping them improve their own return experience will benefit them too. See what your customers see while they stand in line. Is there an opportunity for cross-promotion? Ever considered Pop-up displays to capitalize on impulse purchases while they wait? Get creative about how to turn that waiting line into something fun for your customers and profitable for you. Pay extra attention to exchanges as more than 60% of customers want to replace the items they’re returning.
Regardless of how items get returned to you or to your retail partner, that experience reflects on your brand. When customers have a positive return experience, 96% of them will shop with that brand or retailer again. Make it easy for your customers and do everything that is within your control to thank them and continue building trust with them so they’re loyal to your brand next holiday season.
Then, get creative and entice customers to buy more with an experience.
People want an experience. If they’re going to spend money or time, they want to enjoy themselves. Make sure you’re capitalizing on this both at your retail partner and online.
Pop-Up Stores & In-Store Displays
Embrace the possibilities of what you can do in-store with pop-up stores and other visual merchandising options like endcap displays.
Pop-up shops are gaining traction as fun and interesting way to engage shoppers while in a store. The men’s fashion director for Bloomingdale’s Inc., Justin Berkowitz, says about pop-up stores, “I really think that for the future of retail, it’s important to make ‘brick-and-mortar a place where the customer really wants to come.’” Pop-ups engage customers and are successful, even for large items like furniture. Lovesac Co. reports that 10% of their annual sales come from pop-ups. You can do the same thing with your returns.
If your customers are standing in line, like for returns, make that time count for something. Work with your retailer to have additional items next to them. Make it themed so it stands out visually and highlight post-holiday sales. Have your retail partner train their staff to cross-promote related items.
Putting holiday items in a pop-up store, even in January, can help add excitement and help those leftover products sell. You can even resell returned items in a pop-up experience to turn a bigger profit. REI does a great job of this with their “Members Only Garage Sale!” event where members get enormous discounts and also feel like they’re a part of something exclusive.
You don’t have to sell items at full-price to turn a profit. Discount strategically while elevating the shopper experience so your customers feel like they’re part of something exclusive rather than having to dig through bargain bins.
People love when stores and brands pay attention to them. Show them that you understand who they are with personalized offers. It could be as simple as an email to your loyal customers with a one-time discount “just for them” when they shop at this retailer and buy your product. Driving home that you value them plus adding a sense of exclusivity to an offer can help boost sales by sending people running to the store to grab that item “while supplies last.”
Also, don’t forget about discounts!
People love a deal. And, as everyone knows, after the holidays is one of the best times of the year to save big, so don’t waste this chance. But before you rush into slapping steep discounts on everything, try a few tricks to help both your customers and your bottom line win.
It’s 2020. A new year, a new decade. Re-purpose your holiday gifts under a New Year’s Resolution theme. If your brand specializes in athletic equipment, try bundling a few items together and branding it as a “New Year, New You” package. Or maybe your brand is all about food. Bundle a few different flavors together and call it a “Sampler Package.” You can still discount the package but by bundling multiple items into one price, it creates a sense of savings (and excitement) for you customers.
Instant Redeemable Coupons
Inevitably, you’ll need to discount some products. The great news is, it’s easier than ever to do so with Instant Redeemable Coupons (IRCs). IRCs are stickers or hangtags that a retail merchandiser can do, on your behalf, directly in the store. All you need to do is decide what discount you want to offer, design the sticker, and let your retail merchandising partner do the rest.
Finally, consider donations, auctions, and liquidations if you can’t sell everything.
Once you’ve exhausted your other options, consider ways to unload any remaining inventory. Donating appropriate items to causes near and dear to your brand is a great way to help others and still benefit from a business write-off.
If you’re interested in recouping at least some of your revenue, consider an auction marketplace to resell returned or leftover items. Approved business buyers will then bid on your items and the sheer scale can help you recoup much of your initial investment.
Liquidation and online auctions are good as a last option. Because of the time you’ll spend on these, it’s usually more lucrative to try and sell your excess inventory in-store first, even at a steep discount.
January is a busy month but that doesn’t mean it has to be a sad one. Make a New Year’s resolution for your brand to think about the post-holiday season as an opportunity to try something new and creative with your excess and transitioning inventory.
If your New Year’s resolution is to handle your in-store inventory more efficiently and build a stronger relationship with your retail partners, consider partnering with Retail Merchandising Services, Inc. We specialize in making your products fly off the shelves and are the best in the biz. Contact us today!