The Traveling Retailer's Bedding Sales Tip #3: It’s Time to Get Rid Of Those Leftovers
Furniture World News Desk on
by Gordon Hecht
It’s amazing what they do at restaurants with fancy sounding foreign names. If part of the name of the place has “BISTRO”, “RISTORANTE”, or “TRATTORIA” in it, chances are that they will serve peasant food, give it a name you can’t pronounce, and charge triple for it.
Last week I shared such a meal with two friends. One of the appetizers on the menu was Polenta Tots. You probably know that Polenta is an Italian version of Corn Meal Mush, the same thing my grandma cooked during the depression because it was about the cheapest thing around-and filled you up well! Grandma probably never thought about taking a teaspoon of the goop and frying it so it looks like a Tater Tot. And even if she did, she would have been shocked that six tots cost $9.00 (the menu said Polenta Tots 9), or about a buck-and-a-half per Tot. Grandma would have paid 6 bits for a 20 pound sack of mush!
That night each of us grabbed a Tot, and then someone gobbled a second Tot. True to its nature, the corn meal was filling and we all declined to polish off the last two. When the server came back we happily gave up $3.00 worth of Tots-we were full and it had no value to us. We had it tossed and moved on.
It’s kinda the same thing with your inventory. Whether it’s worn or soiled floor samples, unwrapped pillows, or sheet sets, you probably have excess stock that you need to convert to cash. Perhaps you just need to donate some things just to make space. The problem is in determining the value of the distressed goods. The sad part is that in our society unwrapped bedding loses value, and unwrapped soiled or dirty bedding had LITTLE RETAIL VALUE. Even if you paid $300 for that Pillow Top Mattress, if it’s shopworn or torn, the SALABILITY is gone.
We are all in business to make a profit, so the thought of selling BELOW COST may be unthinkable to you! But the truth is you’ve already lost money. When you compute the cost of warehouse space, missed investment opportunities, and access to working capital, your inventory costs you about 3% per month. Having a $300 bed in the back room or sales floor for a year costs 36% or over $100! A stack of pillows that is three years old costs you more than the pillows did when you bought them. In essence, turning inventory quickly builds cash flow and earnings.
So back to the Polenta Tots. We bought them for $9, ate them until we were full. Our $3 in inventory had no value-fried food tastes bad the next day, especially if we nuke them. In a perfect world, we should have been able to sell them for $2 to the party at the table next to us, but that behavior is normally frowned upon (don’t ask how I found that out!). Since they had no value, we dumped them.
Check your inventory that’s 6 to 12 months old or more. Even if it has a Retail Value of $10,000 and costs you $4500, it may be time to liquidate it for cash, aka working capital. That’s the money you can UNLOCK for Advertising Buys, New Inventory, or New Equipment! Be realistic in your pricing-Get $100 over cost for a damaged bed and you can make a shopper’s day, clear space, and gain a sale. Test Rest pillows should have paid for themselves in gaining mattress and pillow sales, so getting half of cost is a bonus. Here are some other ideas:
- Invest in Duct Tape- wrap up those open bed frames in your back room and offer them for $25 when a shopper buys a mattress set
- Price your old worn, torn, and over-parked mattresses at $125 over cost and pay $25 of that to your sales team as a spiff
- Low Volume Sheet Sets (Twin, TWXL, and Full) that are over a year old should be marked down and presented to EVERY SHOPPER, for their kids or spare room beds.
- Let your sales team know that the faster they can move out old inventory and convert it to cash, the faster you can re-invest in more advertising, hot selling merchandise, and updated equipment. Set a goal for them and a reward like $1000 in liquidation sales = a $50 gift card to them.
Sell that inventory off like it was yesterday’s fried mush. Cash trumps damaged goods every day! Happy Selling!
Gordon Hecht is a Growth and Development Manager for National Bedding Company’s America’s Mattress stores, nearly 400 locally owned and operated bedding stores across the country selling Serta-branded and America’s Mattress-branded mattresses. He started his 30+ years experience in the Home Furnishings industry in Las Vegas, NV as a delivery helper and driver.
He has been recognized for outstanding sales and management achievement with several organizations including Ashley Furniture HomeStores, Drexel-Heritage, RB Furniture, Reliable Stores, and Sofa Express. He has served as Store Manager, Multi-unit manager and National Director of Sales. With his first-hand knowledge of our industry’s front line, Gordon has devoted his career to guiding others to exceed their goals.
Joining National Bedding Company in 2014, as part of the Serta Retail Concepts Group With over 400 stores, America’s Mattress stores is one of the fastest growing bedding retailers in the country.
Co-author of the “Better Bedding Selling Tips” featured on Furniture World Online, Gordon has been a frequent contributor to company newsletters, and contributing writer for industry magazines.
Read other articles by Gordon Hecht