Too much inventory is a problem every business will face at one time or another. But what do all those big box retail stores do when they have to sell extra inventory? Retailers often find themselves with overstock for many reasons and below we are listing just a few of them. We are also Including some of the ways they can sell extra inventory.
1. Overbuying. Large retailers are often faced with the problem of having purchased too much inventory. An example of this can be having too much Winter merchandise and then having a very mild season. This results in having too much product and being overbought. In order to sell extra inventory, they can run a 50% off sale in an effort to sell surplus inventory. They can also advertise an inventory liquidation sale to the public, or post the sale on Facebook, as a way to sell surplus inventory.
2. Weak Sales. Sometimes even the largest retailers go through slow selling periods. This can be due to an economic downturn where money tightens up and consumers stop spending. If retail traffic slows down and sales unexpectedly decrease, this can cause an overstock situation and in some cases may require an inventory liquidation to sell extra inventory.
3. Consumer Confidence. When the average consumer begins to have doubt in his ability to keep a job or continue earning money, confidence in the economy fades and the first thing to be impacted is consumer spending. This is bad news for retail which often feels the pinch; average sales begin to decrease and there is less discretionary income for non essential purchases. This may result in the big box retail chains having inventory liquidation sales to sell overstock.
There are many reasons big box operators may have inventory liquidation sales, but the above are just some of the more common ones. It is important to sell extra inventory rather than let overstock products sit in the stores and take up valuable shelf space.
Consumers are looking for what is new and exciting, not what is old and stale. Customers get bored with the same old thing and get tired of seeing old stock again and again. If a retailer can sell surplus inventory and replace it with something different and exciting, they will have a much better chance of keeping their loyal customer base returning to the store.