Most retailers; whether they sell apparel, technology, or sporting goods; usually operate their businesses on small margins that require them to turn their inventory several times during the year. This is most common with apparel retailers because they have seasonal fashions that must rotate every three months.
These retailers are increasingly concerned with sales volume, customer tastes, and the current trends that could affect sales. This only makes sense because if they misjudge their target consumers and can’t sell their merchandise, it will have to be placed on the clearance rack at the end of the season for a fraction of the actual cost.
So what can we do as marketers to actively help these types of businesses? First, we need to look at their goals and the objectives that fit into their business strategy. Since we know that the average retailer doesn’t want to sit on any of its merchandise for longer than 90 days, we need to develop an interesting way to reach out and attract the target market.
Depending on who the retailer is trying to sell merchandise to, we have a variety of different methods for attracting customers. Apparel stores like Pac Sun are focused on males from 13 to 19 years old. We know that this age group tends to use Twitter along with other social media platforms. Starting an interactive group with hash tags can be very effective for reaching this age group in a localized area.
Keep in mind that stores, like this clothing company, want to manage their inventory control ratio formula because this is the only way that they will be able to meet their quarterly demands of moving goods in time for the next season’s arrivals. That being said, marketing strategies need to be focused on both the short term and long term goals of the store. The short-term goals include selling current seasonal merchandise while the long-term goals are more positioned around customer loyalty and making sure that consumers want to visit the store regularly and continue to purchase goods. Obviously selling current inventory doesn’t matter if customer loyalty is declining in future seasons.
Another concern that most retailers have when viewing sales information is the cost of goods sold or more appropriately called the margin on sales. This is basically the amount of profits the company can make from selling its inventory at retail prices. This should be pretty obvious when stores are concerned with this, but we as marketers can help on this business side. I often show my clients how to use a gross margin ratio calculator to compute an estimated amount of profits that can be made from selling certain items on the shelves. This calculation along with the turnover rates can help the owners know that we as marketers understand their business and know how to improve its performance by connecting with a greater target market.
Just like marketing to consumers, we have to market to our clients that we understand their industry and know how to help them improve.