One of the biggest mistakes that most retailers make when running a Store Closing Sale or Inventory Reduction Sale is to take too deep of discount at the start of the sale. Many of your better selling items only require a small discount.
When determining your initial pricing for the sale you should divide your inventory into three groups. Groups A – B – C.
Group A Items are your best selling items. Items that sell at a good rate and those that you know you will sell. These items should only require a small discount to rapidly increase the rate of sell. In the current economy a discount of 20% is required to even peak customers interest. Do not take further reductions on these items until at least 1/2 way through your sale
Group B Items are those items that sell at a slow and steady rate. Many times these are your basic items. These items should also only require a small discount to increase their rate of sale. The difference here is that an additional discount will need to be taken 1/3 of the way through your sale. That discount should be another 10 – 20 %.
Group C Items are those slow selling, discontinued, out of season or previously reduced items.These items require a much deeper discount to increase their rate of sell. If the item has never been reduced before, you should start at a 40% discount and hold it at that price until 1/2 way through your sale. At that point you should begin taking an additional 10% discount each week until you reach 80% off and you hold it at that price until the last week of the sale.
Group C items that have been previously reduced should start at 50% off (or their current reduction if greater than 50%) and follow the same schedule of further reduction as the other Group C items.
This approach allows you to have a planned approach to your reductions and prevents you from taking too deep of discounts on A & B items, while making sure you face the challenges of C items.
One of the major benefits to using an experienced retail consultant to plan and implement your sale with you is their knowledge of pricing tactics and their experience of making adjustments at the right time.