New Clearance Policy?

[FlowTeamChick]

Just heard something new about how clearance is going to be handled at my store. Instead of having Clearance on a nearby end cap and getting it out of the back, anything that doesn't fit in the home location (like just before transitions) will be left in the back room and salvaged from the back when it goes salvage. Supposedly, this is because the company can take a write-off and less TM time will be used ticketing product.
We have guests who consistently shop the clearance end caps, looking for a good deal, and then of course they shop the regularly priced merch and fill up their carts. They're going to be unhappy about this.
But what I'm really interested in knowing is if this is being done at other stores? Is it a new company policy?
I don't think it's illegal, but it does strike me as being unethical, sort of "cheating" the system. Thoughts?

 

[BKop16]

That's certainly not a company change. If it was actually better off for the company to take the write off then surely they would just have us salvage everything straight off?

 

[Targen]

We've been doing this for maybe a year now? I believe it was a district decision. The problem is that we now have zero space in the backroom because of the amount of clearance/salvage sitting there. And there's so much more salvage that it takes way longer to process than if we just ticketed the clearance and let it sell.

 

[BKop16]

We've been doing this for maybe a year now? I believe it was a district decision. The problem is that we now have zero space in the backroom because of the amount of clearance/salvage sitting there. And there's so much more salvage that it takes way longer to process than if we just ticketed the clearance and let it sell.

Also a lot more clearance goes CRC to drive profit. So in the end ticketing it and letting it sell would have been just as easy. Also with the change of needing the RLTM to physically scan all CRC to a pallet it adds even more workload.

 

[HInbound]

Defo not corporate wide. Our district pulls people into Zoom meetings to explain why they have so much clearance in the back room still.

 

[FlowTeamChick]

This strikes me as one of those "if it ain't broke, don't fix it" things.
I always try to do a liability pull right after I set a transition POG - figure it's good to free up back room space, get the product out on the sales floor and let it sell down. Definitely not all things sell down (like the really expensive protein powder just recently - even at 50% clearance, it didn't move), but an awful lot does because guests love a good deal.

 

[vendordontmesswithme]

We've been doing this for maybe a year now? I believe it was a district decision. The problem is that we now have zero space in the backroom because of the amount of clearance/salvage sitting there. And there's so much more salvage that it takes way longer to process than if we just ticketed the clearance and let it sell.

Even longer now with this " Chain of Custody"

 

[BKop16]

BTW if anyone from HQ snoops on here. Id be curious to see if one could create a metric on the percentage of ticketed clearance that sells before savaging. If one was trying to drive sales and profit after all...

 

[gsa4lyfe]

BTW if anyone from HQ snoops on here. Id be curious to see if one could create a metric on the percentage of ticketed clearance that sells before savaging. If one was trying to drive sales and profit after all...

You can just look at salvage units and compare to first markdowns for the same category.

 

[Nauzhror]

That's certainly not a company change. If it was actually better off for the company to take the write off then surely they would just have us salvage everything straight off?

I am not saying I think it is a company policy, but your comparison also isn't appropriate. It can be more worthwhile to take the write-off than to sell at 30%, 50%, or 70% off, while not being more worthwhile than selling at 100%.

I doubt 30% off is less profitable than the write-off to be clear. 70% might be though, once you factor in payroll spent on discounting the items and merchandising them.

My data could be wrong, but I was told by one of the TL's at my store that supposedly salvaged items usually resulted in us being reimbursed for roughly 7% of their value.

On a $100 item, even 70% off makes sense IMO, since 7% is $7, 30% is $30. $23 is about 1.5hours of payroll for base-pay team members.

But I can see where on a $5 item, it might start to look more sensible to just salvage and spend less payroll since at this point we're talking about selling the item for $1.50, or salvaging it for $0.35.