The true cost of 'nasty jackets'

At a recent training session a discussion started on that hoary old topic of what to do with stock that does not sell - the slow movers. The trigger in this case was a particularly ‘nasty jacket’ to use the staff’s words. You know… the stock that everyone said was not going to sell.

The owner demanded that it stayed on the floor (of course) and the staff had to sell it. It had been moved around the store – to no avail: with other jackets, to the hot spot in front of the store, and even a special effort to merchandise at eye level. One of the team attempted to merchandise it with one of the sexiest bikini in the store, and declared that to be her final attempt to get rid of it.

Nothing sold. Every morning staff were encouraged to sell harder. During the previous 4 weeks we used time, money, space, effort, and energy to sell stock, which did not sell and never was going to sell.

The cost of doing all of this is known as creeper cost. From an initial margin of 50 % the achieved (real) margin would have decreased to about 30 % over a 12-month period and you would still have the same “nasty jackets” in stock.

The lesson for the manager (and the team) was not to hang onto stock that is not going to sell. Identify the stock, get rid of it, and make space for the stuff that is going to sell.

Not only will your margins be better, you will have happy staff who like the stock they are selling and serve the customers accordingly. Which is maybe the TRUE benefit...