Spotting and clearing dead stock

A dead product is one that has not been sold for a long time. Thirty days is a good first threshold for a food shop, sixty or ninety for a slower business. The threshold matters less than how regular the check is.

Make the list once a month, with each product's last sale date. It is a mechanical sort, not a feeling.

Ten bags of rice sitting there do not cost the same as thirty toothbrushes. What counts is the value tied up: remaining quantity multiplied by the purchase cost.

Rank the list by that value, heaviest to lightest, and deal with the first ones. You recover most of the cash without touching the thirty toothbrushes.

The example below shows the gap between quantity and the money locked up (illustrative amounts, in FC):

So thirty toothbrushes tie up less money than ten bags of rice, despite three times as many units. It is the value, not the number, that says where to start.

A time-limited discount on the product alone. A bundle with a product that sells well, sold together at a price slightly below the sum of the two. A display at the till, at arm's height, with the label visible.

Choose one per product and give it two to three weeks. One action run seriously beats three half-applied ones.

The discount must stay on the dead product. If you also lower the price of the product that sells well, you lose margin on what was earning you money, and the customer gets used to the low price.

The bundle is often the best way out: it clears the dead stock without touching the displayed price of the product that moves.

Dead stock costs twice: it takes up space and it locks up money you could put back into products that move. A discount accepted today is often cheaper than a carton that stays another year.

Note the quantity at the start of the action and compare three weeks later. If nothing moved, it is not the customer you need to change, it is the action: a bolder discount, another location, or a bundle with a more in-demand product.

To spot dead stock without sorting by hand, the stock reports of MerchantHQ give the movements per product — and if the bundle's selling price worries you, see calculating your margin and selling price.