When independent retailers decide that they are going to have a Store Closing Sale without the assistance of an experience professional store closing consultant to help, the opportunity for mistakes is huge. The single largest mistake that most make is in their discount strategy to liquidate their inventory.
Most store owner that run their own Store Closing Sale often times begin the sale with too deep of discounts or take the same discount across the board. It has been my experience that 80% of the retailer’s inventory should be at discounts no greater than 20% to start the sale if their inventory is fresh and current. The remaining inventory would be at 30%, 40% and 50% discounts. This inventory is old or shop worn inventory, inventory that has already been marked down prior to the sale starting, out of season inventory or discontinued inventory.
Taking the same discount across the board may be the easiest way to do it, but it is definitely not the most profitable way. Why in the world would you take the same discount on your best selling items as you would for those items that move slowly.
Another reason to take smaller discounts at the beginning is that it leaves you the opportunity to use additional discounts later in the sale in your promotions to generate additional interest and store traffic.
I never use actual percent off in my initial advertising. Because most of the costumers do not think a 20% discount is enough discount to entice them to come in and shop, we don’t tell them what the discount is. We let them use their imagination. Oh what a imagination they have, We advertise “Huge Discounts”, there are some, “Everything on Sale” and “Everything Must Go” to generate the traffic.
Once in the store and faced with only 20% off discounts on the best items, they buy because they know it will not be here next time they come in if they wait. That is the magic and physiology behind running a profitable Store Closing Sale.
Chuck Haug
CCH Consulting, LLC
520-305-9693
Retail Store Closing Sales 