Discounts- The Top Retail Trend to Clear Excess Inventory & Move towards Recovery
- Posted on December 24, 2022 by Robert
- Reading time about 6 minutes
As we are aware the retail industry is one of the most competitive sectors in the business world, many stores often struggle with inventory gluts and look for options to clear excess stock without much loss. After the recovery from the COVID-19 outbreak, the impact of the Ukraine assault and other unprecedented challenges appeared forcing brands to make use of steep discounts to clear excess stock.
Though this trend started in the AW2022 season, it is likely to continue in 2023 as well so that retailers get a chance to alleviate supply chain problems and make space for new product launches. In this blog, we will check out how brands can offer discounts to address this challenge with the help of the reliable Rewards Program Platform for Businesses that will unlock more success stories in the coming year.
The reason behind the Problem of Unsold Inventory
With the retail sector recovering slowly from the COVID-19 pandemic, many businesses are facing the problem of disrupted supply chains forcing many stores to even shut their doors closed and reduce their operating hours. At the start of 2022, consumers were slowly returning to shopping malls and shops with a revamped interest in making new purchases but many stores couldn’t fill their shelves with new products as old ones are piling up and delays in deliveries from manufacturers.
Addressing these challenges was becoming a primary concern for retail businesses. They start over-ordering as they expect an increase in demand will continue. However, with the Russian invasion of Ukraine, we have witnessed inflation, and stock market crashes leading to recession. This means there is excess inventory in hand.
The problem arises as retailers need to pay for warehousing unsold inventory as it costs money to maintain the physical storage, hire labor & other resources to maintain & manage the inventory. Apart from that, if the inventory stays for a long in a warehouse, it may become obsolete or even lose value, resulting in further losses for the retailer.
This means keeping inventory for a long time can lead to a capital tie-up that could be used for other purposes like investing in new products or marketing efforts. The cost of warehousing unsold inventory can be a huge burden for retailers restricting them to grow in their business, which is why they look for ways to manage their inventory more efficiently.
How Discounts Can Help Manage Old Inventory Pile Up?
Discounts can be an effective way to clear excess inventory that helps brands manage them better and move ahead in their business, especially after the pandemic. Discounts can be applied to specific products or the entire range of products. If you are managing a huge inventory space, you can automate discounts and deals using software, which reduces manual efforts to a huge extent.
Here are some of the ways to offer discounts for better inventory management-
– Go for steep discounts on products
Discounts act as a great way to attract new customers who want lower prices than what your competitors are offering. This also encourages existing customers who are waiting for something better or cheaper from your brand to make a purchase.
– Offer Discounts to encourage future purchases
Make use of discounts smartly so that your customers can take advantage of future transactions. For instance, use delayed discounts like Spend X amount to save Y% on the next order, as it can be an effective way to increase customer engagement.
– Switch to Automated Discounting
Automated discounts work effortlessly & deliver more results in lesser time. You can run discounts across multiple sales channels like websites, apps, stores & even social media!
Tips to Automate Discounts & Free Up Storage Space for New Launches
Automation help brands manage things more effectively in lesser time saving time as well as effort. Making use of discount automation can help brands to increase sales and revenue by moving excess inventory more quickly & freeing up space for new products.
This gives businesses a chance to focus on new products making them more attractive to customers with the help of personalized offers and deals for the target customers. Offering discounts can help businesses to prevent inventory from becoming outdated, as products are sold off on time avoiding the chance of clearance sales.
Here are some of the steps to take while considering discount automation by brands-
– Items Identification from Inventory
Take time to identify the items that are overstocked or have been stored in the space for a long time. These are the items that are appropriate for discounts.
– Choose the Suitable Level of Discount
Ensure that you choose the right level of a discount considering factors like the demand for the product, level of competition, price sensitivity & more.
– Set up Discounts using Automation Tool
Make use of the right discount automation tool to set up and apply discounts easily on the relevant items and update as per the changes in demand or market.
– Track & Monitor Discount Effectiveness
Keep a check if the discounts you are running are doing enough to clear out overstocked items and help in the desired level of inventory reduction. Make adjustments if needed.
– Make Decisions Using Data Insights
Post analysis, extract insights to help in making future inventory management decisions, which will help in keeping a more balanced inventory in the future.
After going through the blog, we can conclude that discounts can be a great way to reduce excess inventory and manage supply chains more effectively. This enables retailers to offer steep discounts on unsold inventory giving them enough space for new stocks in the warehouse. Storing unsold inventory can be a quite expensive affair as it can lead to lost sales and reduced profits making discounts the best way to clear old stock and prevent unnecessary consumption of space.
Novus Loyalty, our reliable loyalty platform can help retailers automate discounts with the best business loyalty program enabling them to adjust their pricing based on real-time data. This will not only help to optimize their inventory levels and prevent excess stock but also lead to more efficient supply chain management for better profitability. To know more about Novus, book a demo with our experts and achieve outstanding results using automated and target discounts.