To ensure you dominate the first quarter of retail, we provide our advice on what to look for when analyzing sales performance, taking additional discounts and adding new lines for sale.
Here we are already halfway through the first season of the year and in the middle of the Mid-Season Sale (MSS) chaos. Your markdown SKUs are live, but how are they tracked? Are selling like hotcakes or spinning another 20 weeks of coverage?
Now is the time to check how your markdown performance compares to your retail markdown strategy by keeping inventory management top of mind. We want to avoid having funds stuck in slow moves from last season.
Below are some things to consider in order to determine what steps to take during the MSS period to ensure your success.
Review what works and what doesn’t
I like to think of retail analytics as a a better way to understand your customer. Sales analytics will give you insight into your pricing architecture and which products resonate with your customer.
1. Full price vs markdown mix
Examine the performance of the current clearance stock. During sale periods, we expect to see a change in the percentage of sales coming from markdown, after all the object of the game is to weed out underperforming stocks. However, if your data tells you otherwise, it may indicate underperformance.
2. Markdown coverage
Consider how quickly your selling stock turns. You want to make sure you have enough inventory to continue selling strongly for the rest of the selling period. On the other hand, if you have too much coverage, you risk being overcharged.
3. Markdown inventory sales rate
Your sell rate will tell you what percentage of markdown inventory you have sold.
The combination of these measures will make it possible to identify the levers to be activated to obtain certain results.
For example, if you have a SKU with many weeks of coverage and a low ST percentage, the pull levers would apply an additional discount associated with marketing support.
Act as soon as possible
Now that you understand what is happening, it is time to implement actions and use the levers identified to influence the results of your business.
1. Apply a bigger discount
When you receive an additional discount, it is normal business practice to protect profit and margin and to ensure that you never offer discounts greater than the cost of the share price you paid for.
Next, decide how you will execute the additional offer you have decided to apply for. We suggest looking back at previous promotions and sales messages to identify the type of offers that resonate best with your customer. For example, did the “3 for $25” promotion do better than “Another 25% off”? Don’t be afraid to test the water with different promotions, test and test again until you find your magic formula.
2. Identify the new rows to add
If your mid-season sale is overperforming and you have sold out a large number of SKUs, you may decide to add additional lines to your sale. Adding new items makes your offer exciting and can keep the customer coming back to see what else is on offer. Since markdown sales messages typically drive more traffic to your website, you want to make sure there’s a wide enough assortment of products to increase the chances of conversion once they arrive.
3. Delete all exhausted rows
Remember to remove items that have sold out. Landing on a sales page with sold out items is not a great experience for your customer.
The results of having out-of-stock items in your online store can have a bigger impact on your business than you might think. Conversion rate, customer acquisition cost, and repurchase rate can all be impacted if out-of-stock items are left online on your site.
4. Engage in marketing
Finally, don’t forget to let your client know about the changes you’ve made. After all, there is no show without a punch or without marketing support in terms of retail.
Sales messages should be consistent across all your marketing channels. Consider how much inventory you need to clear and whether it warrants paid advertising to really drive sales.
Take the lead in your season by analyzing the points above and taking action now to achieve MSS success.