Advertising, Sales, & Turnover

I have lived in several major market areas in the last 15 years: Detroit, Denver, and Portland, OR. They all have one basic thing in common, the number one advertiser's on TV are Mattress and Furniture stores, who run sales 24/7, 365 days per year! Obviously, no one ever pays full retail for a mattress or a sofa. But 20% off, all the time, is just a lower "everyday" price. Off hand, their Ad budgets must be 25% of sales, and what about profit? In these same markets, dozens of these same stores go out of business yearly. Whose left to buy from?

At the opposite extreme, many merchants seem to never advertise or have sales, or ever lower prices, as if that would demean the products and reputation of what is sold. Yet, they too are slowly going out of business. Both extremes are perhaps symptoms of poor or bad management.

When I was in retail management, back in the 1980's, sales were often a monthly event, clearance was to move slow or poor sellers, in another word, turnover! Most sales or clearance starts at 20% off and continues until the inventory is exhausted. Most retailers would probably be happy with 1.5 turns per month. Some others are more aggressive, basing replenishment and mark downs on as little as a weeks sales. I am in that category...if it's not selling, why keep it?

In summary advertising and "sales" should be part of a management plan wit a goal in mind over the long term. Managing inventory for maximum profits is just as important as human resource, marketing, or financial management.