How to Leverage Black Friday to Clear Your Dead Stock

Catherine Erdly: Do you have too much stock in your business right now? If you feel like there is a lot of money tied up and maybe not quite enough in your bank account right now You are not alone. I can assure you And today’s episode is going to be all about how do you deal with that? And how do you clear particularly your slow selling dead stock without damaging your brand at Christmas time?

Hi everyone. I’m Catherine Erdly. I’m the founder of the resilient retail club, which is my membership group and mastermind for product businesses. You can find out more and also find out about my new stock doctor service by heading over to resilientretailclub.com.

And today I’m going to be talking about my favorite subject, all things, cashflow and stock management. And what I wanted to really highlight is that this is a topic that is of a huge amount of interest to people. Whenever I talk about clearing dead stock, it is always something that comes up and people are really interested to know more. And I wanted to just point out the fact that if you feel like you’ve got too much stock, this is the perfect time for you to be doing something about it.

So what I wanted to talk you through today is what dead stock is, why it’s so difficult and damaging to your business. And how do you actually shift it without hurting your brand?

Welcome to the Resilient Retail Game Plan, a podcast for anyone wanting to start, grow or scale a profitable creative product business with me, Catherine Erdly. The Resilient Retail Game Plan is a podcast dedicated to one thing, breaking down the concepts and tools that I’ve gathered from 20 years in the retail industry and showing you how you can use them in your business.

This is the real nuts and bolts of running a successful product business, broken down in an easy, accessible way. This is not a podcast about learning how to make your business look good. It’s the tools and techniques that will make you and your business feel good. Confidently plan, launch, and manage your products, and feel in control of your sales numbers and cash flow to help you build a resilient retail business.

The Impact of Discounts on Brand Perception

Catherine Erdly: I’d like to start off by just talking about what really hurts brands. And what really hurts brands is the customer’s perception that they can buy whatever they like from the business if they just wait long enough for a sale or a discount.

And that is a very difficult drug to wean off. And it’s the reason why I am very much against doing repeated blanket discounts. A blanket discount, by the way, is when you offer money off everything. So 20 percent off everything, 25 percent off everything. These in general are not my favorite types of promotions.

Now I will also just caveat that by saying where I’ve seen these kind of promotions work is when people use them very sparingly. So maybe once or twice a year. So if you are planning on doing a blanket discount for Black Friday and that is your big promotion that you’re doing for the year or this half of the year, then absolutely go for it. Don’t let me put you off.

But I wanted to talk specifically about using Black Friday or this promotional time period, whether you participate in Black Friday or whether you go for something that is focused around, for example, small business Saturday, a couple of weeks later, I wanted to really explore how this time of year could be used to shift the stock in your business that isn’t working for you.

Effective Stock Management Strategies

Catherine Erdly: So when it comes to your stock, the analogy I like to make is that you have to think about the stock in your business, not as physical products, but as about actual money. So if instead of seeing a mug that costs 10 pounds or could be sold for 10 pounds, you actually see that as a 10 pound note, it becomes very apparent where the money is in your business.

And trapped money in your business isn’t just stock that you’ve just bought, it’s stock that is on your shelves, that maybe was a previous bestseller that you haven’t sold recently, odds and ends, ends of lines, things that you just haven’t promoted recently, or things that you maybe bought a while ago and have forgotten about.

And the thing that I’d like to remind you is that one of the key principles for having a profitable product business is the speed at which you get the money back that you spend on your stock. So you do a pre order, you get the money even before you, maybe you’ve paid for something or right as you have to pay for something.

That is a very fast turnaround and will be much more profitable and cash rich than buying stock and then not getting your money back from it. In other words, selling it for months and months or even years. So if you feel like you’ve got stock hanging around that you don’t really know what to do with, then this is the episode for you.

The thing that puts people off is they worry, well, if I do a promotion, that it will damage my brand. People will think we’re not a premium brand. I would definitely say that promotions do get a bad reputation from that perspective, because if you think about The most prestigious retailers that you can think of, whether it’s Liberty or Harrods or Selfridges, all of them will do promotions and sales and things like that.

They just won’t do it all the time. What really damages brands is what I call the gap trap. When you just Consistently offer really heavy discounts over and over again to the point at which people just think, well, I’m just not going to buy it because I know it’s going to be discounted. So it is a real fear about discounting.

And to be honest, I think it is actually really valid, but there’s one hand you don’t want to be doing too much discounting. If you are sitting on a lot of stock, then you could really use this time of year, where people are expecting to see promotions, you could really use this to shift some stock.

I also think that consumers perception about your business and what you’re doing and discounting and things like that, I do think is actually really related to timing. So January sales, for example, that is something that people completely get and understand. So if you’re running a sale in January, nobody’s going to be batting an eyelid.

And now increasingly, people are expecting to see discounts and offers in November and December. So again, this is not something that will really surprise people. They won’t say, That business looks like they might be in trouble because they’re running all of these offers. Now, if you did that at a typical prime selling time period, maybe it’s, you know, Mother’s Day and you’re selling all of your Mother’s Day stuff at half off, like that starts to look distressed.

But if you are discounting at a time when discounting is really common, then it’s not going to feel nearly as out of line for the customers. So all of that said, how do you actually do it in a way that is profitable?

Identifying and Categorizing Stock

Catherine Erdly: So the key thing here is really to understand that not all stock is created equal or not all stock has equal value to you and your business.

And I have talked about the subject before on the podcast, but I just want to reiterate this idea just in case it’s new to you or as a reminder, if you’ve heard me say it before, but I wanted to talk about the stock buckets.

So stock buckets is what I suggest that you do. And this is really the key, the crux of how you clear stock profitably, because really Your ultimate goal should always be to sell things at full price if you possibly can, but there will come a point at which you have to recognize that you’re not going to sell things at full price.

So therefore you have to make a decision about what you’re going to do about it. So the five buckets, I’m going to talk these through in more detail, but they are your prime stock, your okay stock, your ends of lines, your slow sellers, and your out of season stock. So what you want to do is go through your reporting.

And have a look at the various different types of stock that you’ve got and putting it or mentally or with a highlighter or put it in the spreadsheet and highlight it however you wanna do it. Work out what you’ve actually got.

So prime stock, that is stock that basically makes up your best sellers. It should be the kind of stock that makes up typically around 80% of your sales. And it will be the kind of thing that you’ll know that if you offered it a 20 percent off, it would really rock it. But then you’re going to end up having to reorder it because it’s something that you sell all year round.

If you’re a bit heavy right now on some of your absolute key best sellers, that is not a bad position to be in necessarily. Obviously it would be good if you weren’t quite so heavy, but you know, you can sell this stock into the spring and onwards. So it’s not something that you really need to worry about.

So one of the biggest ways that these blanket discounts really hit your bottom line is that the customer will come in and they’ll buy probably what they were going to buy anyway, but they’ll buy it at a discount. And they usually cream off the top, your best sellers that you think, Oh, I could have sold that at full price.

But now you’ve sold it at 25, 30 percent off whatever you’re offering and you’ve got to rebuy it, but you’ve sold it at this lower margin. That’s my biggest beef. I think with these blanket discounts, apart from the fact that they give a very unfortunat essage to your customer, which is that they can get anything they want from you at a discount.

So that’s my biggest beef with them, that it often puts you in this position where you’ve sold your best sellers that you could have sold at full price anyway. Now, as I said, the reason that you would use an 25, 20, 25 percent off everything message is because it is very powerful. It is something that shifts stock. It is something that gets sales and it gets people’s attention.

This is not to point the finger. If you are planning on doing a blanket discount for black Friday, and you only do one or two a year, then absolutely go for it, but just be aware that you will be selling more of your best sellers.

Now there is a way you can actually, especially if you’re selling online. In fact, Where my offices were when I worked on Regent street in London. There was a big shop opposite me and I could see them all prepping for a big 20 percent off everything, or it might’ve been 50 percent off all sale, or it was some big message that looked really eye catching like, everything.

And what they were doing, cause I could see them prepping, was they were taking all the bestsellers and hiding them in the back so that they could say it’s 20 percent off everything, but they wouldn’t lose out on their bestsellers. I mean that is something that you can do. You could just hide things on your website, but generally speaking that those messages are stronger, which is why you would use them.

But if you were really dedicated to finding a way of specifically clearing stock without touching that prime stock, that is really why the identification process is so important. Go through and work out like what is, to be honest, not something that I should be discounting. What do I think I probably sell this at full price?

The next bucket along is the stock that’s kind of OK. So it’s not your best sellers. It’s not terrible. You think it’ll sell through eventually. It’s not. It’s not all, it’s not something that you’re really super worried about, but you don’t think you’re going to carry on with it. Now this stock, it kind of depends.

It depends how much you’ve got of this stock and depends how much money you want to make from your promotion. If you’re really in a tight cashflow situation, I would be tempted to discount this stock. Just say, okay, look, I’m not going to reorder it. It’s not my best sellers. It’s okay, but I’m just going to clear it.

I just want to take some money off and see if I can shift it. You don’t have to do that. If you’re feeling pretty good and you’re not really just out to clear as much stock as possible Then you might decide you know what I’m just gonna make a note not to not to reorder this. This is what we call DNR do not reorder stock. So I know not to reorder it But I’m just gonna let it sell through by the overall general higher footfall that you get around Christmas

The next bucket is the end of line So these are particularly prevalent when you’ve got a fashion brand.

So you might be out of key sizes of certain things, but this can happen to everybody. You might have things that’s running low, that are running low. You’ve got broken availability. You maybe don’t have all the colors. You maybe don’t have the whole set if it’s something that’s sold in sets. that has complimentary items. There might be singular items.

These are things that you might just decide to discount to tidy them up. You might think, okay, all right, let’s just get through those. These are great for what I like to call ethical urgency. So creating ethical urgency means that you’re really highlighting when there’s not much left.

So this could be a great email. This can be great posts, just saying like, we’ve just got ones and twos of these and this can be something that don’t always need a discount. Sometimes you just need to remind people that there isn’t much left.

Then you’ve got your slow sellers. So the fourth bucket is your slow sellers. So these are the ones where you’ve got lots of stock. It’s not selling. You have to go through it and decide, is it not selling because I haven’t had it in long enough? Have I actually been promoting it? Is it just something that I thought was going to sell and it hasn’t sold? You really want to understand why is it not selling, but this really should make up the big bulk of your clearance event.

And this is what we’re going to talk a bit more about specifically how you target this during Black Friday.

The final bucket is just to watch out for things that are just out of season. So if it’s something that’s super summery, or super focused on, I don’t know, Valentine’s, Mother’s Day, something that is extremely seasonal to a different time of year, then I would be tempted to just leave these alone as well, because, you know, you could really try and push it and try and clear through some of this stuff, or maybe you just want to whack a discount on it and see what happens, but Ultimately, you know why it’s not selling. It’s not selling because it’s not the right time of year. So it’s not necessarily the kind of thing that you want to focus in and target

Promotional Tactics for Slow Sellers

Catherine Erdly: So the question is is if you’ve got these slow sellers, then how do you actually tie that into your promotions? Well, basically If you’ve identified that actually all of this other stock is fine But this particular bulk of stock is slow selling like this is the then can be the feature for your For your promotion, for your black Friday offers, it could be special pricing for your subscribers.

It could be multi buys. So let’s say you’ve got really a lot of stock of something and you just really want to shift it. You could say, you know, buy, you know, could do buy a three for two. So buy three, get one free, something like that, because you want to encourage shifting actual amounts of the stock in general, anything that you could do that increases overall spend.

So, um, Money off over a certain amount of money, gifts over a certain amount of money, free shipping, free wrapping, whatever it might be over a certain amount of money is always good for trying to clear through your slower stock or you just have it as an offer where you have money off these particular items.

And there’s all kinds of messaging. If you look at how retailers do it. Big retailers talk about this. They’ll call it, you know, seasonal offers, handpicked selection for you. I don’t know if any customer really does believe that it’s all hand selected as their most popular styles to have been selected to get a discount or whether they just realize this is the stuff that isn’t selling, but it’s nicer messaging sometimes than.

money off our absolute worst sellers. So I would say the most profitable way then is to focus in on the, the slow sellers and to do something that is targeted, that is specific, that is money off. You could choose a whole category. You could choose just very particular items, whatever you think is clean and easy.

You do want the message to be super simple. You don’t want the customer to have to think too much about what they’re going to have to spend or what they’re going to get.

You can certainly combine offers, so it could be get five pounds off from free shipping or something, or 10 percent off over a certain amount plus gift.

You know, you could stack offers. That’s something you can do, but generally speaking, you just want to keep it really, really super simple and clear so that your customer isn’t, they’re already bombarded with a load of information, but you want to make sure that it’s really clear on your website, what’s included.

If you’re not including everything, you need to be really clear, have a collection of what the promotions are, what the promotional items are. You want to just make it really, really super clear and easy to understand for the customer so they don’t get confused. Nothing annoys me more, especially in a bricks and mortar store is when you’re wandering around and you’re looking at things and you’re thinking, is this included in the promotion?

not included. It just is too much mental energy at a time of year where you don’t really have much mental energy. You just have to, you know, choose gifts and do your Christmas shopping. So you don’t want to be thinking about things. So just try and make it really clear and really easily signposted. The good thing about this time of year is that people are looking.

So an extra tip would be, can you spin this as a gift in any way, shape, or form? Can you say, you know, perfect gifts for X, Y, Z. Can you tie the slow stock to the idea of it being Christmas, whether it’s the Christmas table or dressing for Christmas party, or the perfect gift. I mean, even if, even if there’s a possibility, it could be a gift.

Could you spin that? I think that it’s, it’s. Good. Yes. People are looking for discount, but more than anything they’re looking for things relevant to the season. So making sure that you’re, you’re kind of making a no brainer. Oh, we’ve got this great product and we’ve got, it’s at a great price and it’s the perfect gift for you or it’s the perfect outfit for Christmas day or is the perfect jewelry for your Christmas party or it’s the perfect addition to your Christmas table.

You know, can you, Spin it somehow so that you’re not only offering the money off these items that are frankly clogging up your cashflow as well as spinning it as something that is great for Christmas as well. So you want to, to really make it look like it’s for the customer. So I’ve got this great things for you.

They’re going to be great for you to give or to use a Christmas. And Hey, guess what? Their money off. Now, if you actually feel like, do you know what?

Final Tips and Recommendations

Catherine Erdly: I don’t really have too much old stock or you know, maybe you make to order and you just have a few samples and things like that hanging out, hanging around.

There is nothing wrong whatsoever with you holding out until post Christmas, whether or not you want to do a boxing day sale or a new year’s sale. There’s absolutely nothing wrong with doing that instead of doing seasonal promotional offers. A little bonus tip for you. What a lot of big retailers do, and I have done many, many times in my life is they have a look at the things that they know are going to have to be cleared in the January sale and they forecast them from sort of the middle of November onwards.

They say, right, based on sales patterns, based on what we think we’re going to take over Christmas, do we think we’re going to sell out of these before the sale? This is probably going to go in the sale. It’s sale fodder and it’s the way that their thought process goes is okay This is going to be going into the sale at probably about 50 off But we’ve got six weeks between now and christmas What could we do to speed up the sales so that when we get to the the big clearance sale?

We don’t have to sell it at 50 off. So a lot of the stock that you see in the seasonal offers, money off offers around Black Friday and into early December, a lot of that stock is what’s already been earmarked for the January sale, but they’re trying to see, can I sell it at 20 percent off, 25 percent off instead of 50 percent off?

It’s not a bad, to be honest, it’s not a bad thought process to go to. If you’ve got stock that you think to yourself, I am probably going to have to clear this at 50 off in the, in the January sale. If I don’t want it sitting around too long waiting, especially if it’s your brown bananas. So your brown bananas are your things that are absolutely going to be undesirable as soon as the event has passed.

So anything with a Christmas tree on it. And advent after the first of the of December that kind of thing So have a look at those are you getting through them? And if you’re not getting through them, are you prepared to hold on to them all year? or if you Know i’m not going to be holding on to them all year Uh, I’m going to have to clear them in a January sale at 50 off or even less.

Okay. Well, can I offer some of these up at a slight discount now so that I can see if I can clear through a bit and encourage some sales pre Christmas, take advantage of all that money being spent pre Christmas and see if I can clear through some before we get to the, the big day. And before we can, um, before we feel like we have to either put it back away in the, in a, in a box somewhere to sit around all year and.

Eat up my cashflow, my, and my storage space. Or can I, uh, can I just shift some basically?

So there you have it. This is the perfect time of year to be aware of what your stock position is. I really strongly recommend going through. Your reports. If you use Shopify, I strongly recommend the ABC report. It is not perfect because it’s only telling you the last 28 days is only basing it on the last 28 days, but it’s better than nothing.

And you can at least have a look at your C grade stock, which is your tail or your 20 percent of sales coming from 80 percent of your stock. It’s your slower movers. Basically you can have a look and see if there’s anything in there that you know that you could shift. So happy stock clearance. I hope you found this useful.

I know that this is a tricky subject and lots of people find it difficult to get their head around how to do these kinds of discounting sales, stock clearance without damaging the brand. But I really do believe that especially if it’s off selected items, you’re sending a clear message to the customer that they may not get what they want from you at money off.

Especially your best sellers, especially if, you know, statistically speaking, they’re most likely to want to buy something from you that you’re not discounting. So I think that targeted promotions like that really do help with the whole avoiding of damaging your brands, but they can be really useful for actually shifting stock that is building up and really tying up your cashflow.

So do come over to Instagram at resilient retail club. And, let me know if you decided to do anything based on the podcast. If you made any last minute adjustments, if you’ve already set up all of your emails and promotions for black Friday, I apologize if I’ve given you food for thought, but, uh, Hey, if I can help you avoid selling some of your best sellers that you might have sold at full price with a discount, then that would be great.

And also, you know, you can react, especially if it’s a several day promotion that you’re planning, you know. Big retailers, when we were in promotional time periods, we would be watching almost hourly what the sales were and they would be reacting and changing. If things weren’t going the way that they wanted to, they would shift and change.

So you could always try something more targeted. And if you feel like it’s really not working and you wanted to shift to blanket, then it’s always a message you can send out that says, All surprise, we’ve had such a great reaction we’ve decided to offer money off the whole store. You know, it’s always that kind of thing.

I’d love to know what you decide to do, but also don’t forget to like and review the podcast in Apple podcast. It makes a huge difference. And also if you like or follow or subscribe, depending on what platform you’re on, then that makes a huge difference as well and you’ll be the first to know about each new episode on a Thursday morning. Until next week, happy discounting.

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