January marks one of the year’s hardest challenges for retailers as they seek to liquidate old inventory to make room for Spring-related goods. Excessive discounting risks diminishing a retailer’s brand appeal. Poor inventory forecasting in the Fall can result in severe losses in January, resulting in significant gross margin loss.
The losses taken in January are unfortunate for large retailers but life-threatening for smaller firms and emerging start-ups. It is also wholly unnecessary.
An oft-overlooked solution is to donate end-of-season inventory and to take the tax write-off. At minimum, this can often be more profitable than to off-load old inventory at a loss. Spending scarce resources selling out-of-date inventory also represents an opportunity cost when firms should be focused on the Spring season and the future.
The process of donating inventory is a relatively painless one. For American apparel companies, established non-profits like Delivering Good can facilitate the process and provide all necessary paperwork.
Consider doing good in January. You might end up doing rather well for yourself too.