Music industry veterans Bob Popyk of Music Trades magazine and Alan Friedman of Friedman, Kannenberg and Co. teamed up at the 2015 NAMM Show to talk with music retailers about a critical issue: aging inventory and what to do about it.
“Making sales is the most important thing you can do, but moving aging inventory is a close second,” Friedman said. “Why is it so important? You’re tying up cash and hurting profitability.”
Friedman listed all of the costs that retailers incur when inventory sits too long, including: purchasing and shipping, merchandising, rent (store space and warehousing), data tracking and pricing, physical inventory, financing and floor planning, shrinkage, breakage and labor costs. He added that you can tack on 30 percent to these costs, on average, for every year inventory sits.
“The biggest cost of carrying old merchandise is the opportunity cost that you’re missing,” Friedman said.
He added that having cash lets retailers buy items that they know will sell quickly, such as accessories. This lets retailers make money instead of taking a loss.
Popyk then shared 10 ideas to move your aging inventory. (Watch the video for more information.):
1. Get staff involved. Make sure they’re on-board with promotions for aged items and will help move them with enthusiasm.
2. Get suppliers involved. He mentioned that they might take product back if you place an order for something else, so ask them.
3. Use eBay and Craigslist. Be creative and clever with your copy, so the item stands out.
4. Barter for goods or services. Providing product to your local radio station can be a win-win.
5. Get customers involved. Call a customer, and simply ask if he or she knows anyone that might be interested in buying products you want to move.
6. Make the item easier to buy. Offer creative financing to customers.
7. Offer a drawing in your store. Get local organization involved, such as senior homes, and get people into your store.
8. Adjust the price. It’s preferable to sell a product and get cash by adjusting the price than to let the product sit.
9. Bundle it. Pair up the product with accessories, sheet music, lessons, picks or whatever might help it move.
10. Donate it.
Bonus idea: Ramp up your sales skills! Ask every person who comes into your store, “Do you want to buy it, or do you know someone who might want to buy it?”
Friedman advised retailers to track their inventory. This way, they’ll know when they have a problem. Re-merchandise the product, have an event sale, offer spiffs—try everything, but be proactive and turn it into cash.
Both Popyk and Friedman agreed that you’re going to make some buying mistakes, and some products just aren’t going to pan out as expected.
“Don’t beat yourself up,” Friedman said. “Know to do something about it, and know what to do.”