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Don't let closeouts close you down

Worried about inventory that you can’t get rid of? Here are some strategies to help you cut your losses.

Closeouts. Is there a dirtier word in tennis retailing? With the steady stream of new product introductions, heavy competition and overall economic climate, closeouts are a regular part of doing business these days. But that doesn’t mean closeouts have to close you down.

A variety of leading retailers and manufacturers say that creative solutions do exist when it comes to closeouts, but the consensus reveals the most logical first step: smart — but not necessarily conservative — buying.

“I buy very closely to the vest for the year, so I usually have very little left over,” says Mark Mason, owner of Mason’s Tennis Mart in New York City. “But it’s very rare for a retailer to sell more than 80 percent of a collection anyway, so you’ll usually have things left over in each category.”

And whether it’s a seasonal closeout — which is the most common to most retailers — or a random time of the year, the goal for many is just to break even, lick your wounds and get on with it.

“We just try to get our money back,” says Dale Queen of Your Serve Tennis in Atlanta. “There are different sales life cycles for different items, so when we decide to close it out depends on that.”

But Queen echoes Mason’s bottom line when it comes to minimizing closeouts throughout the year. “We are buying smaller quantities up front now,” says Queen, “because in the past we’ve had so many shoes and racquets left over. There are so many products coming out now, you just don’t have room for anything.”

Queen says the apparel and shoes life cycle in his shop may last about six months, while racquets last up to a year or more. But Queen says that shelf life also depends heavily on the quantity of new product introductions, when the need to make room for a hot new product can force retailers into closeouts. “Generally, when companies come out with new products, we’ve got to make room for them. Our walls are only so big,” says Queen.

“We’re trying to order more often,” he adds, “choosing to make three smaller orders rather than one big one. In my situation, that’s the way to go.”

Some retailers may take a more proactive approach to closeouts. For instance, Roger Kenworthy, owner of The Tennis Racquet in Grand Rapids, Mich., actually takes his closeout items on the road, mostly to local schools and coaches in the area, to sell off his inventory.

“The best method for selling closeout products, especially racquets, is to show it directly to the customer,” says Kenworthy. “For me, that’s the schools, or gym coaches. That’s the way I started the business anyway.”

Kenworthy does his sales calls in the morning, before he opens the shop. “It might be unusual, but it works for me,” he says.

But is there any way to avoid closeouts? “It’s gonna happen,” says Gamma/Fischer’s Chuck Vietmeier. “But the retailers usually won’t get upset if they’ve had a good run, and only have two left of something, then put it on closeout. But when they have a wall full of racquets that won’t sell, they need to work something out with the rep, and find the best way to solve the situation. It doesn’t do either one of us any good if you’re not moving product.”

Prince Tennis Senior Director Dave Holland says that, from the manufacturer side, avoiding closeouts at the retail end starts with “excellent planning and forecasting, so that as new technologies are introduced, we don’t create disruptive inventory planning for our dealers. So, in a sense, we don’t clog up the arteries.

“We don’t want to create a lot of closeouts,” says Holland. “In fact, the objective is to have zero closeouts. And we’ve made great strides and have gotten a lot cleaner in that regard.”

The key, adds Holland, is working with retailers far enough ahead “so we allow ample time to plan new introductions into our cycles. We’re all working together, so we don’t want to spring any surprises.”

Do manufacturers ever take back unsold product? Off the record, some retailers have indicated that at times, and under certain circumstances, this does happen. But it certainly is not a practice that retailers, whether large or small, can rely on to help their bottom line.

But some retailers, like Mason, also use their closeouts to lure otherwise wary customers into the shop.

“There are people who only buy on sale. Why not satisfy that customer too?” says Mason. “At least give them that option. Some of my customers are only looking for sales, and I make sure I always have something to bring them in. It’s a good vehicle to promote traffic — that’s where closeouts are wonderful. That’s how I think of it.”

But when the new collection comes in, Mason is sure to relegate old inventory to the sidelines, pronto. “I wouldn’t keep the old with the new. It visually just takes away from the new,” says Mason. “If they’re shop-worn a bit, don’t look like they belong, you’re better off taking leftover pieces and putting them on closeout.” Mason has turned a back-room storage space into his sale annex.

Ultimately, however, limiting the fear factor may be the best medicine of all when you’re considering closeouts, says Queen.

“We just try to minimize our losses, turn it around as fast as we can and get on with it,” says Queen. “That’s just part of doing business. I’m not afraid of it, you’re going to have them, there’s really no way to get around it.”

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Cashing In On Closeouts

• Draw Them In With Closeouts: A bargain-shopping customer can be a blessing in disguise for a savvy salesperson. “Closeouts can sometimes help you sell the new stuff,” says Dale Queen of Your Serve in Atlanta, “because a lot of the people that come in looking for half-price stuff end up buying things at full price.”
• Work With Local Reps: Your local rep should serve effectively as a good barometer when planning your buys. “The local rep needs to know their accounts, and sell them what their clients will buy,” says Chuck Vietmeier, product manager for Gamma/Fischer. “Otherwise it generally comes back to get you anyway.”
• Separate But Equal: To create a more equal “playing” field, try to establish a separate retail space for your closeout inventory, utilizing an old storage room, for example. “Visually, I separate my full-price customers from my sale customers, so they can’t even see each other,” says Mark Mason, owner of Mason’s Tennis Mart in New York City.
• Hands On: Certain inventory (especially shoes) should be displayed right on the sales floor, which lets customers pick and choose and serve themselves, saving your staff time in the process. “It’s a really effective means of moving some of your closeout inventory,” says Queen.
• Turn The Tables: Closeouts go both ways, so make sure you ask your local reps about dealer closeouts, where you can potentially earn back some lost profits. “Just because it’s on closeout doesn’t mean it’s junk,” says Roger Kenworthy, owner of The Tennis Racquet in Grand Rapids, Mich. “If I know that a manufacturer is closing out a racquet, but it might not work for a regular customer, I’ll buy a bunch of them if I know a local school’s physical education department would go for it.”

If you can’t find the right dealer closeouts, be sure to ask your reps for incentives or premiums that may help sell off remaining inventory. “If you want them to bring in the new, you have to help them get rid of the old,” says Vietmeier. “The rep has to resell that guy over and over again, so he needs to put in the effort.”

From the June 2004 issue
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