Chapter 10: Running a Successful Sale and Event
The real key part of the business is running a sale and I'm going to encourage you not to run sales. There's other techniques that we can do and one of my favorite is running events and promotions within the store. Sales are a necessary evil, but there's actually four kinds of sales that we want to run. We want to run the end of the season sale, which is typically run at the end of a retail season. Without being a resort store, there's always a couple exceptions to the rule, you want to run your sales in January. The next sale is probably going to be after Easter and Passover, so March or April.
The next sale will be in July and the last sale will be in October. So we're running the end of season sale four times a year. The next sale you want to run is called a clearance sale. Now again, some of these words that I'm going to use, I don't want to run by your store and see a big sign that says clearance sale. Come up with something cute and clever to kind of name your sale. The next sale is usually run in January and in July, so in case you haven't noticed, one sale runs into another.
The end of season runs into the clearance sale and that's when you get a lot of the advertising that says, and this week take another fifty percent off, that's because they're running one sale into another. The next sale that we run is what we call the liquidation sale, and again, don't use that terminology. The idea is that usually the month of July, again if you're not a resort store, the month of July you want to clean house. Everything that's left over, you want to mark down as aggressively as you can. Usually we just put things at one price, like all t-shirts $5.00, all jeans $10.00, whatever it is.
Ideally, you want to do it once and you want to do it outside of your store, like as a tent sale or in a parking lot or in New York City in a big urban area, a couple of stores will get together and might run a sample sale. The fourth sale is used at your discretion and a lot of times you're going to open up a box and say, oh my gosh, what did I buy? Trust me, after seventeen years of buying, I still do the same thing. It's okay. The idea is to get rid of your losses quickly. In the beginning of the store, in the front of the store, you might want to put a little table and a little sign that says, new arrival twenty five percent off.
That's going to get the attention of the customer and if we think about why we really run sales, the number one reason is to get rid of old, dead stock. Don't sit on it. The longer it sits in your store, the more money it costs you. I'd rather that you turn it over and make $5.00, $10.00, $20.00 than have it sitting there wishing that the right person is going to come along for it. The next thing is, you do want to create a sense of traffic and excitement in the store when you're running a sale. If you don't invite people, if you don't send out promotions or emails or have signage that you're having a sale, nobody's coming to your party.
The next important thing is, the end of season sales are done to build cash flow, because then you're buying product for the next season and it's important to not have your money tied up in dead inventory. Here's kind of a tricky point too, but you want to run these sales because you want to have feedback from the customer. Let's say that you've been selling cashmere sweaters at $300, but they really only sell when they're twenty five percent off. Now you know that the new magic number for your store is 275 and not 300, as your retail price point, so you're going to be more aggressive when you buy at market.
The other thing that I want to talk to you about is that, and this has a lot to do with turnover, right? It's important to keep the store looking fresh and new. Sometimes, and every store knows when they have a dog in the store. It could be two weeks or two weekends or three weekends, you know that something hasn't sold, it's a dog. Again, at your discretion you're going to have this end of season sale. The idea is that you want to buy as shallow as possible, six pieces, twelve pieces and this has nothing to do with fashion basics like your basic trouser or a white blouse, you always want to be in stock in that.
The real fashion items, you want to be in and out. The reason why is you want to create fashion emergencies. When I come in on a Saturday and see this great blouse that I wanted to buy from you and waited, or hesitated and I come back next week and it's gone, you just created a frenzy inside me, an anxiety. That's what you want to create. The next time I come to your store and I see something, I'm not going to wait for the sale. I'm going to buy it at that moment.
When running a sale, just keep in mind, it's important to make sure that it's a real sale, or a deep discount. I wouldn't start any sale for less than fifty percent off. Nobody's going to get out of bed for ten percent. You cannot nickel and dime the consumer. When you're getting ready to run the sale, make sure that it becomes an event that everybody wants to go to. Make it fun, make it exciting and it will draw new customers to your store.