Clear Out Excess Inventory With Strategic Promotions
The original version of this piece appeared as a Chain Store Age post.
When retailers find themselves stuck with excess inventory after a holiday, the go-to solution is widespread, dramatic markdowns. But this technique can quickly eat into profit margins, and customers may even be hesitant to buy from the brand full-price.
To solve this problem, brands need to be more strategic with their promotional pricing strategies. Here are three ways to do so:
First, consider how you can emotionally connect with customers in a way that will encourage loyalty after the post-holiday sale ends. Use messaging that appeals to customers’ emotions, recognize the identities of the people shopping the sale, and think about telling a story. When customers feel seen and appreciated, they are more likely to make a full-price purchase or even recommend your brand to family and friends.
Second, consider bundling those hard to sell items with more popular ones for a lower price than the items would cost individually. This allows customers to enjoy price reductions without getting the impression that your brand sells inexpensive, low-quality products.
Finally, try identity marketing, a technique where a brand builds gated offers for specific consumer communities, such as the military or healthcare workers. While a general discount lacks meaning, a gated offer that honors a particular identity makes customers feel recognized. Brands can also tailor gated offers to the target audience. For example, you might offer students and teachers deals on back-to-school items.
The beauty of identity marketing is that it generates a sense of goodwill, thus encouraging customers to not only make that initial purchase but remain loyal. It turns a discount into something much more meaningful and personal.
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