President Perceptive Business Solutions Inc.
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7 Smart Ways Business Owners Benefit from Unsold Inventory

Jul 8th 2019
President Perceptive Business Solutions Inc.
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cash flow unsold inventory

As a local accountant, you likely have clients in retail, and it's highly probable that, at any given point in time, they have at least some unsold inventory sitting on their shelves or in their warehouse. While this might seem like a frustrating problem that could be solved by better marketing, it actually represents an opportunity for them to help themselves if they run into a cash flow issue. 

Here's an example: We live in the part of the mid-Atlantic region that's famous for antiquing. When we visit these shops, it's clear the owners have a fortune tied up in unsold inventory. One explained a novel solution to me: She would buy an item at auction. First, it would be prominently displayed in her shop for several weeks. If the item didn’t sell, she would display it on her table at the heavily trafficked Sunday antiques market. If it didn’t sell after a few Sundays, she would admit her mistake, consign it back to the auction house and use the cash to buy another item.

Below are some smart strategies you can recommend to your clients who are struggling to find enough cash and have inventory they haven't been able to sell:

  1. Closeouts: Half of something is better than nothing. Nobody knows this quite like the wine distribution industry: When a professional has a new vintage coming in and needs to clear out storage space, they offer fantastic deals to local wine stores. These businesses, in turn, will often have closeouts prominently displayed on the sales floor. This strategy can be copied with a lot of different types of merchandise.
  2. Sidewalk Sales: Whether it's a clothing store displaying racks of items outside or a tent sale at a car dealership, the idea is the same: Prices are cut, and the sale merchandise is grouped in one area. Slashed prices and outdoor displays will get passersby interested.
  3. Cleanups: Discounted merchandise is often jumbled in clearance corners, visually diminishing its value. TJMaxx stores sell overstock merchandise from major retailers and ensures that, every evening, the staff carefully folds clothing and straightens items on shelves. The result? The merchandise is displayed to its best advantage and doesn't look neglected.
  4. Different Locations: Product placement is a science. Our eyes are used to seeing certain items in specific places. Think about buying milk at the supermarket. If your client moves the merchandise in their store around, it creates a fresh look, and customers will see the unsold inventory differently. Suggest your client try featuring some unsold inventory in prime locations, like end caps on aisles and near the registers.
  5. Suggestions: When you shop online, the website frequently makes suggestions based on your recent purchases. This is possible to do in a brick-and-mortar store as well. Your client can simply research what else people bought when the unsold item was popular and then place the items near each other with the appropriate signage. 
  6. Swap: If your client's store also has a website, make sure they're using it to the fullest advantage. Encourage them to put less popular items in a warehouse and simply feature them online so they're not taking up expensive shelf space that could be put to better use. If the stock is seasonal, switch it out for something else people won't associate with certain weather or a specific holiday.
  7. Other Businesses: There are plenty of other companies that specialize in buying unsold stock (albeit at steep discounts). If your client doesn't want to or can't organize a sale, this could be a viable option to give them quick cash.

You’ve noticed many of these aren’t numbers-on-paper solutions. Rather, they are creative strategies that can be aligned with your client’s business, which you understand very well. By making these kinds of recommendations, you'll help your customers solve problems and present yourself as a valuable collaborator. 

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