Slow-Moving Inventory in Retail: How to Handle Your Overstock Products

Updated: December 15, 2022

a retail employee looks over slow-moving inventory

Overstocked inventory is unavoidable for almost all retailers, from mom and pop shops to big box stores. It’s nearly impossible to predict fads and trends and the economy can be volatile. While sales reporting from past years can certainly be helpful, they will never be perfect indicators of the future.

Whether you’ve purchased too much product, or perhaps an item simply isn’t selling, there are ways to mitigate the problem. Check out this guide on pushing slow-moving inventory out of your store while increasing your cash flow. 

Slow-Moving Inventory Definition

Slow-moving inventory refers to products that retail companies store for a period of time that they deem to be taking too long to sell. Different businesses have different time frames in which they identify goods as slow-moving. Obviously for some businesses items become obsolete faster than others. 

Companies decide what makes sense for them depending on what they’re selling. For example, if you sell bathing suits and the summer ends, those bathing suits are going to sit around all winter. Or for instance, if you plan on opening a convenience store you will have products like milk and eggs with expiration dates that will make them worthless past a certain date. 

On the other hand, if you own a hardware store and sell nails and wrenches, you’re likely not going to see those items become obsolete so quickly. As such, your time frame will be different in determining what items are slow-moving. Most businesses use a 90, 120, or 180-day window to analyze the performance of an item. In addition, point of sale technology can provide businesses with real-time reports to show the rate of sale for particular items without having to do physical inventory counts.

Why Is Overstock So Bad?

Unfortunately, having overstocked inventory can be crippling for a retail store. It ties up capital, preventing retailers from bringing in new products that will sell better. In industries that rotate seasonally, this can mean that an entire product line is delayed from being on the shelf.

Overstocked products also take up valuable shelf space. Most retail stores are rented, so every square foot must be used to sell. Any items sitting on the shelf for months are just wasting space, and costing you money by preventing a product that would actually sell from being there.

Many retail stores face this issue most dramatically after the winter holiday season. It’s important to prepare for it now. No amount of market research or sales predictions can completely prevent it. So let’s get into a few of the ways that you can combat this problem.

How To Sell Slow-Moving Inventory: Run A Sale 

Sales must be tactfully planned. It’s not advantageous to have so many that people come to expect and wait for them. Rather, you want to keep a sense of excitement and urgency around each sale you have. It’s important to have a point of sale system that can quickly change prices in your database and account for your inventory accordingly. POS inventory management must be easy to use and keep accurate sales information.

  1. Flash Sale – Flash sales are the best way to create a buzz around your store. They are often priced with heavier discounts (typically 50-70% off) and last for a very limited time. Though the prices are discounted enough that you may be selling some items at a loss, it’s still better than keeping dead stock on your shelves.
  2. Clearance Section – You could either have a permanent clearance section in an effort to attract bargain shoppers or create one seasonally to feature overstocked inventory. This slow-moving stock typically consists of items that have been in the store for at least 3 months. Clearance sections are a great way to try out different prices as well.
  3. Seasonal – For retailers that order different stock seasonally (most of us out there), seasonal sales can be a great way to rid your inventory of excess products. Like November 1st Halloween candy, consumers have learned to anticipate great seasonal discounts. Market your store as a destination this January. This will get those people back in your doors at other times of the year as well.
  4. Product Specific Sale – Storewide sales can be dangerous if not managed perfectly. A larger-than-expected turnover can result in losses bigger than anticipated and take months to recover from. For this reason, sales of only a limited number of products may be wise. These can also be more targeted. With just a few products on sale, you may know the demographic interested in your product and advertise accordingly.
a retail store displays a 'final sale' sign in a window in order to quickly sell slow-moving inventory

Overstock Pricing Strategies

We discussed advanced pricing strategies a while ago, (take a look for more detailed info), but let’s rehash a few ideas on how pricing can help move your stubborn stock. Using POS reporting like ABC analytics allows you to easily identify problem products, giving you actionable data with your pricing going forward.

  1. Bundle Products – Pairing a best-seller with one of your poorly moving products is a great way to get things moving. Make the pair cheaper than the two would have been individually, of course, but price it so that you’re still making a profit. Consider also pairing a high-margin item with a low-margin one. Bundled deals are fun for customers and a great way of sneaking that overstock out your doors.
  2. Complementary Items – Take advantage of shelving strategies and your product placement. Situate slow-moving products next to top-sellers, especially if they’re related products. It might remind someone to buy something they forgot they needed. For instance, you might have a great artisanal soap that sells like crazy, but a loofa that needs some love. Put them next to each other and see what happens.
  3. BOGO – “Buy one get one” deals are the best. And they’re ridiculously hard to say no to, even if you don’t really want the product. Grouping several units of the same slow-moving product together can get inventory moving quickly. Plus, giving away free products is a proven way to get your average customer to spend more.

Remerchandise and Position Products Differently

For some stores, your overstocked problem might be solved by simply rearranging your store and livening up the space. Consumers don’t want the exact same layout forever. This goes for both brick and mortar as well as eCommerce stores.

  1. Add Signage – Make your overstock stand out with bright signage and nice displays. You can add signs outside or in the windows as well. Just use them to draw attention.
  2. High-Traffic Areas – Spot your areas that get the most traffic and create a display featuring a few selected products. These are great spots to also highlight bundled deals or other pricing promos. The area around your point of sale and your entrance is also prime real estate for showcasing targeted items.
  3. Improve Your Product Pages – Product pages on your website must look neat, practice good retail SEO techniques, and convince the customer to make the purchase. It might be worth taking new product photos. These are not as expensive to get as you might think, and can make a huge difference for slow-moving stock. Also, check your copy to make sure it’s clear and enticing.
  4. Revamp Website – If you notice a few products in your webstore aren’t selling, but they are in your physical location, consider the organization of your site. Consumers expect eCommerce sites to be intuitive and easy to navigate; they won’t go digging for long. It’s important that products you really need to sell are easily visible on your webpage.
  5. Improve Employee Performance – Your staff on the retail floor should know what products to push. Sales associates should be trained in suggestive selling techniques. Even cashiers should have basic knowledge of products and store layout. Remember to continuously train your staff, and make sure they’re properly compensated!

Use Them As Incentives

Your business has so many other areas to worry about these days. You need to promote loyalty programs, encourage referrals, beef up your social media following, and build an email marketing list. You can pursue this while also dealing with your overstock.

  1. Incentivize Loyalty – Offer freebies as rewards for signing up on your website, leaving a review, tagging you on Instagram, or referring a friend to your store. These get your existing customers excited and help build your brand on different levels. They don’t need to know that you’re desperately trying to get rid of those items to clear up more room on your shelves.
  2. Set Benchmark Spends – You can also set spending thresholds that come with a free item. Usually, these start around $25 or $50, and are an easy way to enhance the perceived value of a product. It increases average spending, nullifying the loss of giving away an item.

How Do You Handle Overstock Products?

You might have tried some of the strategies above and didn’t see much of a change. Or perhaps you don’t have the time to put into the marketing.  So here are a few ideas you can throw in late in the game.

  1. Liquidation Centers – Big liquidation sellers will buy just about any overstocked item. Mind you, it won’t be a great deal, but a pennies on the dollar is better than zero. This is a good option if you have a large number of units of the same product that you need to sell.
  2. Charitable Donations – You can also take this as an opportunity to give back to your community. Donating items is something that most retailers do anyway, but if you can combine it with slow-moving inventory that must go, it’s a win-win. Plus, you can earn federal income tax deductions for idle merchandise donations.
  3. Negotiate with Your Supplier – Your supplier may allow some returns depending on the situation. You can argue that the product was a poor choice for your market. If the items are still in perfect shape and in the original packaging, a supplier may have another source for it and happily take it back. After all, you’re giving your suppliers business; they want to make you happy just as you do with your customers.

Dealing with slow-moving items is no easy task. Nonetheless, it’s one that’s best anticipated and prepared for. KORONA POS offers the best retail sales reporting and inventory management on the market. Our smart, robust software offers insights to help business operators get a clear picture about their product performance and stock levels. Contact us at KORONA with any questions about how your retail POS system can manage your overstock inventory. We’re here to help your business succeed.

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Frequently Asked Questions About Slow-Moving Inventory

What is considered slow moving inventory?

Slow moving inventory refers to products that have not sold for a certain window of time.  Retail businesses have different time frames that they consider to be appropriate for their stock to move off of the shelf. Generally, these windows are either 90, 120, or 180 days.

What causes slow moving inventory?

There are a number of factors that can cause slow moving inventory. A new product may have been released that makes older ones somewhat obsolete. On the other hand, sometimes business operators simply order too much inventory of a specific product for a given time period.

How do you manage slow-moving goods?

Using a more efficient and dynamic schedule at a retail store will help keep your staff levels optimized based on your store’s traffic. You’ll need to be fully staffed during busier times, but can cut back on staff during slow times. Having a dynamic schedule allows you to reduce costs during down periods.

How can you reduce labor costs without cutting staff hours?

Increase the efficiency of your business by streamlining operations and implementing procedures and uniform policies. These help delegate tasks to the right people and increase productivity among the team.

How can I lower payroll costs?

There are many ways to lower payroll, but for small businesses that pay staff at hourly rates the easiest way to lower payroll is by reducing hours during slower times of the day. Use your sales reporting in your POS system to identify time frames where you can reduce your staffing.

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Writen By

Michael Chalberg

Michael has long focused his writing on the world of retail and small businesses. He''s been a part of the KORONA POS team since 2018 and loves helping entrepreneurs find ways to adapt and succeed. In his spare time, you'll likely find him hiking somewhere in the Southwest.

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