You're managing limited shelf space for clearance products. How do you decide what stays and what goes?

1 Inventory Data

Your first step is to dive into your inventory data. Look at how long items have been on the shelf and their sales velocity, which is the rate at which a product sells. Products that have been sitting for an extended period with little to no movement are prime candidates for clearance. However, if an item has a slow but steady sales velocity, it might be worth keeping on the shelf a bit longer, especially if it yields a decent profit margin.

2 Sales Trends

Next, analyze recent sales trends to forecast which products are likely to sell in the coming weeks. Seasonality, holidays, and even local events can influence shopping patterns. If a product's sales spike during certain times of the year, consider timing your clearance to coincide with these trends. This way, you're not only freeing up shelf space but also catering to anticipated customer demand.

3 Profit Margins

Pay close attention to profit margins. Even on clearance, some items may offer a better return on investment than others. Calculate the profit margin of each product by subtracting the cost from the sale price and dividing by the sale price. Products with higher margins are often worth keeping on the shelf longer, as they contribute more to your overall profitability.

4 Customer Appeal

Consider customer appeal, which is crucial for moving clearance items quickly. Products that resonate with your customer base or have a broad appeal are more likely to sell, even at discounted prices. Think about what your customers are looking for and use that insight to decide which clearance items to prioritize.

6 Space Allocation

Lastly, be strategic about space allocation. Balance the need to clear out old inventory with the potential of new arrivals. Sometimes, it's better to allocate more space to new, full-priced items that can drive higher sales volumes and profits. Regularly reassess your shelf space allocation to ensure it aligns with changing inventory levels and sales goals.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?