With the news that UK department store chain Debenhams is set to briefly reopen 97 of its shops during May in the attempt to host a last-ditch fire sale, we want to tell you how to go about it the right way.
If your company is closing down and you have stock you still need to get rid of, a fire sale is often the best option for you to take. It is key that you remember when you are closing down your business to actually take enough off of your items that customers feel inclined to buy a lot of your stock. Slash your sales by upwards of 40% or even as high as 70% if you really need to move it on during your closing down sale event.
Remember that you aren’t looking to make huge profits here rather you are simply trying to cut your losses in the best possible way.
The Boohoo takeover
If you visit the Debenhams website right now, you’ll see that they are currently hosting a huge sales event in order to ship some products and services they need to get rid of. The other thing you’ll likely notice is that the vast majority of the products that are listed are Boohoo branded items, as they are taking over proceedings after purchasing the Debenhams brand and website for an estimated £55 million.
The BBC reported on the purchase and said, “Fashion retailer Boohoo has bought the Debenhams brand and website for £55m. However, it will not take on any of the firm’s remaining 118 High Street stores or its workforce. Boohoo said it was a “transformational deal” and a “huge step”. But the deal means that up to 12,000 jobs at the department store chain are set to go. The 242-year-old Debenhams chain is already in the process of closing down, after administrators failed to secure a rescue deal for the business”.
Hold the fire sale three – four weeks before your full closure
You will need to give yourself the right amount of time, so that you can actually utilise your final sales and maximise the amount of inventory that you shift out the door. If you rush your closing sales events and only give them a week or a few days to breath, customer awareness levels will not be high enough and your profit margins will suffer as a direct result of it.
Make sure you have a healthy amount of time for people to become aware of what you are doing and then secondly act upon it; they need the time to get down to your premises and purchase your heavily discounted goods, so please be sure to actually give them that required time.
Bundle your items together
When you are having a sale to ship your last remaining items to the hands of paying customers, why not bundle things together that are proving difficult to get rid of? By doing this you are giving yourself a greater chance of shifting more inventory than you ever thought you’d have been able to.
Even if it works out as a bigger loss than selling everything off individually, only you will know what the chances of everything single product being purchased would have been. If you are currently sensing that once your business’ doors have closed for good that you’ll still have a lot of stock left to ship, get bundling things together asap and sell as much as you can.
Forget about your profit levels for a moment and literally only focus on the amount of items you can get away from your business in a short space of time (under a month).
Business-to-business liquidation auction
Auction all stock left after your official closing date and post-closing event through a business-to-business liquidation sale or auction. You can either put together such an occasion yourself or recruit an organisation that specialises in selling merchandise to other companies.
There is no doubting that using this method will make you less money than selling it off in store to regular customers and members of the public, so do all you can to shift your merchandise that way first.
Donate what you cannot sell
It is very conceivable that you will be left with a few bits and pieces. Despite the fact that you will not technically be selling these items, you can get a receipt from your chosen charity or association for tax-time and deduct the total value. This will end up saving you some cash in the end and you’ll be performing a good deed at the very same time.
Why not host a post-closing sale as well?
Take out some classified advertisements, both online and print, advising individuals that you’re auctioning off your extra stock in mass – make certain to make this qualification to keep individuals from coming in and attempting to buy only a handful of goods. You ought to likewise clarify that you might be open for only a few, restricted hours.
You should set a base sum for each buy, for example, £100 or £250. This will make it clear that people have to buy in bulk and save anyone from disappointment on the day of the event.
During this post-closing sale, value your items a bit lower than you did before you officially closed. For example, if everything was 50% off during your closing down event, you could make everything 70% off during your post-closing sale. Try not to promote this deal before you close – you need to sell as much product at a greater cost as possible.
This will however be very useful for those last few things you couldn’t get rid of, especially if you have a decent amount of stock remaining.
Lockdown restrictions have forced many closures
Last October it was reported that a record 6,001 UK high street shop closures had taken place due to the direct implications of the Coronavirus pandemic and its resulting national lockdown. Of course, beyond this point the total become even higher and although the harsh effects should hopefully start to soon cool down a little bit as lockdown restrictions are lifted, the future is still very uncertain.
From 12th April things in the UK will begin to get back to some level of normality, as pubs, gyms, non-essential retailers and other places of business are allowed to reopen. Following on from this, on 17th May other types of business can return to normal, will cinemas, restaurants and more being able to go full steam ahead.
Face masks will still need to be worn indoors and social distancing is expected to be upheld for now, but the return to our old lives is nearing closer by the day, which is great news for business ventures of all kinds, shapes and sizes.
The fire sale checklist
Here are the key take away points from this article for you to quickly analyse before moving on to the creation of your own last-minute in-store fire sale. Remember that each and every small business venture is different by design, so they may not all directly relate to your company. Simply ignore that points that do not apply and use the ones that do to your advantage.
- Are you advertising your sale in the right places and to the right section of your audience? You need people that are going to take advantage of your offerings and purchase multiple items at a time.
- Are you allowing yourself enough time to make it all worth while? The business should host its final sales for around 3-4 weeks. A period of roughly a month will give your audience time to interact with it also.
- Have you considered a B2B liquidation auction or sale? If not, you should do, as it will help to get rid of the final section of your stock. Sure, you will undoubtedly be looking at financial losses here, but they won’t be as hefty as just allowing your remaining stock to sit around.
- You should look at donating anything and everything that you have not been able to sell. This will be the most moral thing to do with your merchandise and it will even help you out financially later down the line.
- Lockdown restrictions are coming to an end, could your business be turned around and saved? It may not be too late for you, so don’t hesitate to find out more on how you could be helped with dealing with your current situation in the most beneficial way possible
Struggling to sell off your last items? Try these techniques
Here are a few techniques that may help you to close sales more effectively while you still have the time required to do so:
Create a sense of urgency
Make it clear to the customer that you’ll soon be permanently closing down. By attaching a deadline to the sale you’ll be forcing the customer into a position of urgency and may even make them consider making additional impulsive purchases. This doesn’t mean you’re rushing the customer under any circumstances; you are simply letting them know they need to act soon, or they’ll be missing out.
If a consumer is faced with a good deal, which is only available for a very limited amount of time, it is likely they will jump at the chance of securing the purchase. Occasionally, people will just need that extra reminder to serve as a final convincing push.
Acknowledge your competitors
If your customers seem indecisive, let them know that you are more affordable than your closest competing businesses. This is because your prices will be slashed until you officially call it a day and shut up shop. That’s right, even when you are on the brink of closing, you still need to keep in mind that appearing better than your competitors is one of the key ways of getting customers to spend money at your business.
If you are priced more affordably than the competition, let people know about it; it will act as your biggest selling point. You won’t have to battle with the competition for much longer, but you should put your full effort in until the very end of your business’ journey.
Be real about your situation
Let the customer know that you are closing down without making them seem sorry for you. Playing on a customer’s emotions isn’t always a sure-fire way of securing sales and boosting profit margins. Instead, you should focus on appearing real to your cliental, explain your situation and then move on to what’s most important to your consumer in the moment: the potential sale of products and services.
By doing this you will normalise the situation and put the customer at ease. This, coupled with the fact that your prices are at an all-time low, should make any customer feel more inclined to get those last-minute purchases over the line in time
With over three decades of experience in the business and turnaround sector, Steve Jones is one of the founders of Business Insolvency Helpline. With specialist knowledge of Insolvency, Liquidations, Administration, Pre-packs, CVA, MVL, Restructuring Advice and Company investment.