by Steven Gomez

Created on: January 03, 2009

Many retailers typically rely on the holiday rush for as much as 30-40% of their annual income. But after a combination of the recession and adverse winter weather, many retailers are sitting on a huge inventory and facing a significant shortfall for 2009. The next year will be quite lean, and the best solution at this point is to cut losses and try to rebuild momentum for the coming year.

If you can recoup some losses with sales, get fresh customers in the door by meeting their needs and hook them with quality products and service... you can stay afloat during the tough times and build momentum for the next big shopping season that will enable recovery and success.

- Clear your excess inventory with clearance sales. You should first slash prices on existing inventory and advertise these sales as much as you reasonably can to get the dead weight in the stock room out the door. With the holiday season over, you as a retailer will not make the money you anticipated, but the inventory you planned on clearing during the holidays can still make you some money. Have items nobody wants? Mark them down as much as you can and get them out the door. The alternative is to let it sit on your shelf untouched, and inventory sitting on the shelf doesn't make you any money.

Another benefit of these sales is that your cheaper product can draw customers and foster goodwill by giving them a product of consistent quality for a reduced price.

- Changes in the economy changes demand. Change your focus. In leaner times, the wants and needs of your customers will change. To cut costs, customers will cut back on wants, and focus their money on meeting needs. Research your particular market to figure out what needs that products in your line of retail can meet, then focus on stocking and aggressively marketing those items. This may shift your marketing and sales focus dramatically, but adaptation is necessary for survival. You can continue stocking and selling perennial staples to your business, but focus on building new business in a changed economic climate and finding ways to entice those new customers to come back later.

- Keep it lean. When an individual loses income, they understandably cut back on purchases until things get better. Likewise, with reduced business and income, cut back on how much product you keep in stock, until you move the existing product in-house or until you receive enough business to consistently move the product that you order. Cut back on staffing and maybe even reduce your business hours during slower times of the week to save on utilities. You may even consider ending the lease of your space by moving to a cheaper space nearby, if reasonable. Cut costs where you reasonably can to extend the period that your business can manage until you can restore your income and customer base.

The preceding advice is general in scope, but every business is different, coming with its own set of parameters and challenges that you understand much better than I do. But no matter what niche your retail business services, you can reduce your losses and build momentum for recovery by selling marked down inventory, adapting your business to meet the needs of customers in a recession and keeping costs down until your business recovers.

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