The Scarcity of Off-Price Goods

by Steve Pruitt

Q: Over the last two seasons I bought a lot of off-price merchandise, which helped my margin. I‘ve noticed that there is a lot less off-price merchandise now so how much margin should I expect to make?

A: You’re right—there is a scarcity of off-price merchandise but you need to keep your margin up because sales aren’t going to be increasing a lot. You need the same level of gross margin dollars as last season and the trick to this is to increase your planned turnover, which will assure that you have a strong sell-through when you get to the end of the season. Slow turn will leave you with excess inventory—the most common cause for margin spill.

Date answered: 01/18/2010
Question raised by: mark