One of the most frequent excuses we hear from retailers who carry too much dead stock is that they need to carry a wide range so that they have credibility with their customers. They believe that if they removed the unpopular and slow-selling products from their range this would slow down the sales of all products because customers would not be so attracted to the smaller range on display.

The latest survey from Retail Systems Research on the “state of the store” will be released next week. This sneak preview of results shows that retail Winners (firms that are experiencing above average sales growth) recognize that their employees need help to be able to deliver the best customer experience.

In a discussion with a pharmacist today I was challenged about the RPM Retail rule that says that all products that have been in stock for 180 days without a sale are “dead”.  He claimed that he needs to hold items that sell as infrequently as once a year, so that when one of these occasional customers arrives in his store he doesn’t miss the sale. He backed his claim up by pointing out that he is located in a tourist town and open 7 days, and when a customer wants a particular product – they need it there and then. There is no opportunity to order goods in for them the next day.

Once a product is dead it should not be considered alive again just because one item sold.  In most cases the sale of one dead item will have occurred as a result of a reducing the price or motivating the staff to move it ahead of more active products. The last thing you want is for clearance sales to trigger a re-order of the same product -  so make sure the product is marked “Don’t reorder” in your POS system.

Every store has some dead stock. In RPM Retail, we’ve defined this as products that have had no sales for 180 days. Because we’ve made it easy to identify dead products a staff member can take action to deal with them on a regular basis. Here’s our suggestions:

1. Flag the item as “Don’t Reorder” in your POS system.
2. Remove the dead products from the store shelves and re-merchandise the remaining products to fill the space.
3. Mark down the price and move the dead stock to a clearance area (or store it for the next clearance sale).

You may have some alternative techniques for step 3. such as holding direct products for a credit from the supplier or bundling the dead products with a better seller.
Retailers fear that by removing very slow moving products from their range they risk disappointing an occasional customer. A much better solution for very infrequent product requests is to implement a “Special Order” for these customers to fill their request. When done well, this service will enhance customer loyalty to your store and does not waste your valuable capital and shelf space on unprofitable lines.

When we surveyed our customers last year they told us that our RPM Retail software helps them make smarter stock decisions. This is the first post in a series that I’ll use to discuss best practices for dealing with dead stock.

The Retail Systems Research website has published results of their survey of the “state of the store.” The number one challenge identified is the “need for more consistent store execution / employee productivity”.

Here at RPM Retail we transform huge volumes of sales data from retailers’ Point-Of-Sale (POS) computer systems into personalised insights to help them make smarter stock decisions.

When we explain our business to people who don’t work in retail, we are often asked – “But most retailers already do that themselves – don’t they?”

Most of the innovative technology in retailing comes from the mass consumer goods retailers and suppliers who invest millions of dollars in data tools and early technologies in pursuit of a competitive advantage.

In November 2011 we released the Freestyle reporting toolset for all RPM Retail users. This gives you quick access to a comprehensive set of reports showing the last two years’ history for your retail sales and stock.