Some stores I’m looking at normally don’t have sales, with the exception of twice a year “semi-annual sales”.
For example some high end office furniture companies have semi-annual sales but no other sales beside. And normally sell under a strict pricing regime and only through licensed dealers.
(I’m not talking about a Macy’s or J.Bank where constant sales are part of their marketing strategy)
Which makes me ask, why bother? Why have a sale twice a year, why not hold to the standard retail price (that they normally sell)? The designs normally aren’t being liquidated in the sale as far as I can tell, it’s just a sale. But what’s the catch? Why don’t most people wait for the sale? It seems like the company would just lose money for no reason.
WAG, but most companies have a quarterly inventory, and they may be trying to get rid of stock, but that doesn’t explain the twice a year rather than 4 times a year.
Even high-end shoppers like a good deal once in a while.
By having semi-annual sales these stores can attract shoppers who will not pay full retail price, but still want the best quality merchandise they can find, and are able to wait up to 6 months in order to get it.
In my college economics class, I was told that there are different price points. If I sell widgets, and I price them at $1000, I might get 10 buyers. If I price them at $500, I might get 25 buyers. My goal, then, is to sell those widgets at $1000 to the ten buyers, and then sell an additional 15 widgets at $500 (I am going to assume that the people who bought the things at 1k would have also bought them at 500). In addition, last year’s widget doesn’t have this year’s features, it’s not in this year’s colors, and it might be a bit shopworn. So I might not be able to sell last year’s widgets at this year’s prices. And that’s why stores have regular sales, really, they’re trying to clear out old inventory. Stores don’t want inventory to sit around forever, they want it to turn over so that they always have something fresh and new. If a customer comes in and looks at a widget, s/he usually decides whether a widget is worth buying at that price. It’s quite possible that the customer doesn’t have the money to buy it this very instant, but it’s also possible that the customer DOES have the money and is willing to pay the price. However, if the customer thinks that the widget is nice, but not worth the $1000 tag, s/he’ll decline to buy. If the customer comes back to the store (and the owner certainly hopes this happens) and sees the same widget for the same price, but no new widgets, the customer is less likely to come back.
In addition, some people will ONLY shop when there’s a sale. They make a point of never paying full price, or at least they say they do. However, once they’re in the store, they might very well find something that they just can’t live without. When I was assistant manager at a dress shop, I was able to convince the owner to let me run regular sales. We had a mailing list, and I was able to get a lot of old customers to come back in just to look at what we had for sale. Once they were in, I could show them the new stock, too. A lot of them came in for the sale items, but left with full-price items as well. I was able to get rid of the stale merchandise AND rack up some big sales of the new stuff. The owner was very, very pleased with me.
Oh yes, there’s also periodical slowdowns as well. We knew that January and February would be very, very slow months. Everyone was tired of shopping, and they were starting to worry about paying off debt that they’d accumulated over the holiday season. So we’d make sure to have at least one sale starting at the beginning of those months.
Back in the days before computers, taking inventory was a huge, time-consuming hassle, often involving the staff closing the store or pulling an all-nighter. IIRC, the store my wife worked at had to do one complete physical inventory in January for tax purposes. Naturally, they would have a big sale right before inventory to get rid of as much stuff as possible.
The summer sale was typically to get rid of “stale” inventory, although there might have been tax implications either for the store or customers.
Sometimes tax issues figure in. As long as you have inventory on hand, it’s an asset and not deductible as an expense until sold/disposed of. At some point, companies might even be willing to throw away inventory just to get it off the books - $100,000 in unsold/unsellable inventory could be turned into a $35,000 reduction in tax for the right company.
If it’s worth it to them to unload the inventory for nothing, then even a sale with deep discounts is an improvement.
I once worked for a mismanaged company that had stored up 15 years of unsellable inventory. At the end of every season, they just stashed it in a warehouse and forgot about it. They sold it all at 75-90% off and donated anything that didn’t sell to charity.
(However, I do think that issues like the ones Lynn Bodoni cites are bigger motivators than the tax write-off.)
Yep, getting the inventory off of the asset list was a big reason. The thing is, we’d buy something for ten bucks, and price it at twenty or twenty five bucks. If we sold it at the full price, great, it was profit, and we’d pay tax on the profit. But even if we didn’t sell it for years, we’d have to carry it on our books, get taxed on it, and keep track of it. Including doing inventory. Even with computers, you need to do a physical inventory now and then, because (supposedly) inanimate objects can apparently grow legs and wander away.
If we could sell the merchandise at a discount, even a deep discount, we could get it off our books, and claim a loss. Or we could claim a charitable donation, if we did that. But stale merchandise becomes harder to move as it gets older. And this is why you’ll see Christmas stuff for sale before Halloween. When something first appears, it’s bright and new and shiny, and people will buy it more readily. So the stores keep putting out seasonal merchandise earlier and earlier, and one of these years we’re going to have Xmas trees for sale before Labor Day.
Freshening stock is important in more than one way.
First, as others mentioned, you want to periodically clear out obsolete stuff, and putting it on sale is a good way to do that. Last year’s models and colors, books that are out-of-print, the summer items as you go into winter, and so forth.
Secondly, inventory does get “shelfworn.” If you can take all of the stuff in the store that’s gotten dusty, dented, scratched, sun-bleached, and dinged and replace it with brand-new shiny stuff – even if you’re bringing in more of the exact same items you sold – the whole store will look better.
This is still true. It takes two days to inventory my bookstore because every single item on every single shelf needs to be pulled down and scanned, and then we have to reconcile the inevitable discrepancies.
