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New Incentives That Move Old Merchandise

Had a recent discussion on doing spiffs for the staff to get rid of old inventory with a store manager. The manager liked the idea of putting a “red dot” on the tag and pay $50 or so for everything they sold rather than putting all old items in one showcase-to keep like items together.

I like the idea of keeping the items together but am not always as thrilled giving a set dollar amount as a spiff. I usually find the store owner is giving away too little amount of money to make it enticing. If they sell one old piece a week and get $50, you might think that's a lot of money. Bet there's two things to consider:

  1. Lunch is $10 around town. One spiff pays for lunch for the week. Woop-de-do!
  2. Your staff comes to work for the "guaranteed pay" you've already promised them, not extras.
If they are making $700 a week ($36,400 a year) then $50 one week isn't really a big to do. Besides, many a sales people think they are "shoving old, outdated product down the throats of their customers" and hate the idea. They'd rather sell new and fresh merchandise. Hey, I would too.

If you give them $50 for a spiff that's the AMOUNT they can earn. But if you gave them a percentage of what they sold that was old it just might make a difference.

If you have a $600 piece of jewelry sitting next to another piece that sells for $900 and both have a $50 spiff, where's the thrill?

You can't make any money from inventory over a year old anyway so you need to move it. An incentive is the way to move old merchandise and YOU might think $50 is an incentive but if you're unhappy with how old merchandise is moving (or not moving) out of the store then take a new approach.

Many stores spend 5-8% of total sales on advertising. Would you hire an advertising firm who said the following?

"Hi there, we'll personally market and advertise to your customers to buy your OLD products. We'll show it to them personally and tell them the reasons why they should buy this beautiful (but old!) item."
    "Great, what's it going to cost me each month?"

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Word of possible warning about OTC

For those of you who "count on" high prices for your OTC goods please heed my warning. I have been selling goods into Europe, Japan and Hong Kong for years and have seen many "waves" of currency fluctuations. This "fluctuation" was for sure different, but typically when the dollar turns around like this a few things happen that are undesirable after affects of OTC buyers.

Mainly, things slow down suddenly. No more 20K for old Daytonas. No more big dollars for big diamonds. No more record prices for certain European artists. Vintage watches and jewelry (and often diamonds) that are normally sold overseas will flatten. Quickly.

My suggestion (one I have rolled with since the early 80's): Don't get bogged down with the idea that you are going to lose money if you sell your stuff. Sell it and take your lumps. Then re-buy the stuff at the new lower price and keep your dollars rolling. Keep the currency flow going. Guys who get hung up on "not losing money" on their current OTC (keeping it in the hopes that the market goes back up and therefore freezing their currency and buying power) are the ultimate losers. After all, you only lose the money once. Then you start turning the money over and over again.

Good luck! This is going to be an interesting ride. There are those who still say the dollar will get weaker in spite of its incredible recent gains and that gold will once again test the 2000 figure.

Responses

Absolutely agreed, the sudden lack of interest in goods will hit you like a hammer. It took years to learn to take any losses quickly and roll the bad money back into the good. I have stacked a fair amount of metals and have been willing to speculate, but for now, in this market all buys will be confirmed and sold as soon as possible. Market corrections can be gut wrenching, just part of the game. Liquidity as ever is the key.

Jewelry in the showcase is no different. Itís all just money. Itís not jewelry, itís an investment. Pretty? Yes, but there are many beautiful women and handsome men that are good to look at but after one date, you're outta here!

I am old enough to remember the aftermath of the Hunt Brothers. It was ugly and I remember keeping count of how many days I would still be in business before I went broke. The number simply got smaller for many days. Then I got mad and started working on the jewelry I had left over from the rush. Nothing is more motivating than getting mad at your circumstances and changing them like a Tasmanian devil.

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