Ways you can make your clearance items more attractive to customers... and more profitable for you.
The last installment in this series generated a lot of response. Clearly, there are warehouse managers, customer service managers, COOs, CFOs, and owners who are sick to death—like me—of the ever-burgeoning pile of NAS goods in the warehouse. Anyone who has had to conduct a huge clearance sale knows the queasy feeling of watching goods leave the warehouse at pennies on the dollar…and the inevitable “good cheer” from the repair guys who say, “Man, we sure sold a lot of furniture today, didn’t we!” Yeah. They don’t realize that even though you may have sold it for cost, you really didn’t, because “cost” doesn’t just apply to the actual cost of the piece. It’s the storage. The handling. The repair, the insurance, the lighting, the leased space, et cetera. In truth, you may have lost your shirt.
Now, with that in mind, remember back to your last clearance sale. Calculate the cost of goods sold, then subtract the amount of cash received from the sale. If this is a negative number, you need help with your repair department.
If your customer service manager “therapeutically screams” in her car at lunch, you need help.
If your warehouse manager spends more time on a lift truck with his head in the racks rather than making sure that the best possible quality furniture is being loaded onto the trucks, you need help.
And if your first-time successful delivery rate is below 90%, you really need help.
You may be able to fix these problems yourself, but if you decide to use a furniture repair consultant, he or she shouldn’t just come to just fix your shop problems, train your repair staff, and leave. He should examine the problems driving the glut of damages. That way, a proactive plan can be created to stem the tide of furniture being shoved into the repair area, not just augment the shop in response to poor handling and inspection. Repair consulting should be a comprehensive plan involving the entire warehouse.
There are very few owners who don’t have damaged inventory problems, or who haven’t had to organize a clearance sale to make room for new goods. Take a moment and think about what is filling up your racks! Is it good stock? Is it current? Or is it a bunch of even-exchanged pieces with minor problems that your staff can’t fix because they either don’t have the knowledge and experience, or don’t have the materials and tools they need, or both? Parts may be free, and replacements might solve the problem, but the cost, and believe me there is a cost, of a dissatisfied customer who must wait weeks for her problems to be solved, are immeasurable.
PREPARATION
Now, some owners would rather clearance an item rather than repair it. If you choose this method, let me present you with a few thoughts, to make the pieces more attractive to a buyer. Consider why a potential buyer is interested in your pieces. Perhaps they don’t have enough money for first-quality. But even at a discounted price, there are problems that a customer will have a hard time swallowing. For example, consider a scratched top on a dining table. Even if the table is clearance priced below wholesale, remember that a dining table top is the most noticed furniture surface in a dining room. Women, who are by far and away the largest furniture-buying customers, will often pass up a good deal like a scratched table if they think they will either spend a fortune getting it fixed, or have a hard time finding anyone who can fix it. Would you buy a used car with a huge hammer dent in the hood? Think of why you send pieces to clearance—too hard to fix, too expensive, don’t have anyone who can do it? And so the scratched dining tables sit in the clearance center, taking up valuable floor space, getting progressively cheaper until someone buys it for a rental house.
Before you ask your shop to repair any scratched tops (in particular), consider previous results. Put yourself in the position of consumer; if you wouldn’t have the piece in your house based on the way it looks repaired, seriously think about asking a local repair shop to simply relacquer the top. Relacquering out of a spray can produce poor, low-quality results. A fresh coat of lacquer (no rub) would probably cost less than $100.
If a piece is clearance, then technically, you are getting whatever you can for it, right? Well, why not consider other options for it rather than the way it sits? For example, white furniture that is scuffed, heavily distressed, and downright shabby-looking, is considered “chic” and yes, it sells well. This also goes for black and red furniture. So if you have a set of chairs that won’t sell because they are kind of homely, why not have your shop spray them black, and rub through the edges with some 320-grit sandpaper themselves? Here are some other options:
• Make the oddball “match.” If you have a piece that looks like it could belong with another group but it’s too (whatever), consider spraying it to match. Keep the color and sheen in mind when you make your decision. If seat fabrics are mismatched, recover them with something neutral.
• Make it “cuter.” Sometimes a piece would look a lot better if it had a little more moulding, or a rubbed-through finish, or paper-lined drawers (easy to do with pre-pasted wallpaper). You can even stencil a design on it and seal it with lacquer.
• Finish the look. Selling a desk and hutch without a chair is not going to work. Find a chair that matches in style, and tone or paint it to match.
• Don’t underestimate the buyer. Yes, you might have found six chairs for a dining table, but do they match, or do they look silly? Consider buying six new RTA chairs for the table that do match. Keep your margin on the chairs, and move the table out of your stock in a “package” deal.
• Do some “name-dropping.” Customers are very brand-conscious. If a piece is made by Hammary, for example, make that perfectly clear—price is nice, but people like to brag about the name more than they brag about the price.
SELLING CLEARANCE ITEMS ONLINE
Some items in your inventory may look wonderful, but don’t fit the expectations of your clientele (for example, something pink and glittery in Wichita). We all make somewhat impetuous buying decisions. Now, something pink and glittery would probably sell in a more tropical setting, like Florida or California, where vivid colors are more accepted. Consider selling your oddball items on the Internet. By using an online auction service, you can reach the entire nation—or the entire world—for a small fee. But you must familiarize yourself with the process, cradle to grave, or you will be in for a big unpleasant surprise. First, be aware that there are fees, which will affect the final value of a sold item. Second, consider your pain threshold. If you can’t beat the thought of parting with an item for less than $X, give it a reserve price. A reserve price is a price below which the piece will not be sold, though no one will know the reserve; it is a mystery for the bidders. (This can be especially annoying to bidders, though, and often convinces them that the price is high—which makes them look elsewhere). Another way of setting a reserve price is to start the bidding at a high amount…which also usually sends bidders packing. Everyone wants a deal, the thrill of the chase. There are a lot of tricks to getting the most money for your items; I strongly suggest you enlist the services of a local online auction assistant who will help you correctly time the listing, present the listing, and handle the questions regarding shipping. It will help immensely if you can offer nationwide shipping: Asking the buyer to pick up only will limit your audience to locals, and those who have searched everywhere and really want your piece. And remember—using an auction assistant will provide you with complete anonymity!
Also check out a new furniture overstock/clearance website called retailbuyers.com.
When dealing with clearance items, your first move should be prevention—proper handling in the warehouse, meticulous inspection, quality repairs, thoughtful shipping. But things do happen, and when they do, don’t be afraid to let your imagination run wild and help you move those pink (and glittery) elephants somewhere more appropriate!
FIXING A BROKEN REPAIR DEPARTMENT
If you decide that your repair people aren’t up to the challenge of helping you generate the most cash from your oddball inventory, you may want to invest in some additional training.
Let’s consider conditions that are likely to maximize this investment.
• Do training while the repair staff, drivers and deluxers are working their normal everyday routines.
• Completely and accurately take inventory of the shop tools and materials so that materials and tools needed for the lesson will be present.
• Make sure that management is involved in the consulting process and refrains from interrupting the training to solve minor issues.
• Compile a shop touch up material list, which will help the consultant to assess the repair staff’s skill level at a glance. For example, Touch-Up Solutions makes toners that are dye-based (transparent) and pigment-based (opaque). There are uses for both. But inexperienced shops usually have more of the pigmented toners on hand because they make faster cover-ups; the problem is that they also block out grain. Repairs that have the grain obscured look muddy and amateurish. Thus, too many pigmented toners on hand will indicate that the staff needs help with spot repairs. Or, if the staff has never heard of glaze, then they haven’t tried faux finishing, and virtually all imported furniture is in some way or another faux finished.
• Finally, it is critically important that management take an active role in understanding repair, or at least the basic concepts of repair, so they are better informed when faced with a less-than-cooperative repair person.
When coupled with a precise and thoughtful inspection process, and careful handling and shipment, high-quality repairs can turn a failing warehouse operation around. The more your repair staff learns, the better able you will be to control your inventory problems and the the more you can relax.