Getting Overstock Out-of-Stock

By Carol Brzozowski

Alamar Uniforms does a booming business, with a product line for the career, chef, healthcare, public safety, security and industrial sectors.

The company has two locations, one in Omaha, Nebraska, and another in Kansas City, Missouri.

But, like so many other uniform companies, Alamar has a challenge: overstock. Steve Zalkin, the companys president, says its a constant problem.

Inventory control is probably one of the biggest issues in retail, he says.

There are several reasons why Zalkins company could be stuck with overstock.

It could be a customer in a uniform program who switched their program. It could be that we overbought by mistake. It could be the manufacturer salesperson did a good song and dance for us and we overbought it. Or, it could be just a product we thought would be good for our market and it turned out it didnt work, he says.

Because his company needs as many inventory turns as possible, depending on the age of the inventory, his company first contacts the manufacturer to see if it can be returned and if there is a restocking fee.

If they do have a restocking fee, then we try to make a judgment as to whether its worth sending back or not, he says. More times than not, we will still give up that restocking fee to return the inventory, rather than have it become dead stock on our shelves.

While some companies address surplus inventory by merely getting rid of it or donating, others try to squeeze out more income by selling the uniforms.

Excess inventory becomes a problem for us when we have large quantities of the same item in one particular size and/or color, notes Stephen Clayton, information technology manager for Metropolitan Uniform & Equipment in Detroit, Michigan.

Servicing a wide array of diverse customers requires that we carry or can obtain different fits for everyone, he adds. Ways we have found to deal with excess inventory are clearance sales, size/style exchanges with manufacturers, and re-selling the merchandise to other companies that are looking for these products, which may or may not be hard to find.

Zalkins company participates in a buying group, where members e-mail each other on an ongoing basis to determine who might be interested in excess inventory.

Somebody in California might need something Ive got here in Omaha, Zalkin points out.

Zalkin also favors using UniformMarket.com, which he calls a swap meet for uniforms. He believes the idea is starting to generate more momentum in the industry.

Last year, Made to Measure magazine launched a service at UniformMarket.com, which among other services offers companies the opportunity to sell excess inventory

What is one companys unwanted inventory can be the desire of another. For instance, a police agency in one area may use a holster style uniform whereas in another region, the agencies no longer do so and the retailer servicing that agency is stuck with uniforms that are no longer needed.

A garment that sits in a warehouse for an extended period of time risks being a style no longer desirable, being deeply discounted in order to move off of the shelves and being a liability to the company holding the inventory.

As such, uniform companies now have a secondary market: the management and selling of overstock and closeouts. The results can be lucrative: one overstock online site makes tens of millions in sales each quarter, with revenues skyrocketing beyond 200 percent.

Through UniformMarket.com, the company with surplus inventory has the opportunity to sell it at a discount to interested markets. Uniform-related merchandise can be sold vertically and horizontally from manufacturer to dealer, manufacturer to manufacturer and dealer to dealer. Companies register at no cost; subsequent postings can cost as little as $25.

An added value over such Internet sites as eBay is that UniformMarket.com listings enable companies to promote merchandise at no cost beyond the listing fee to sell thousands of dollars worth of product costs no more than hundreds of dollars.

In addition to donating or tossing out overstock, companies also may return overstock to a vendor, sell it as new, remanufacture or refurbish, sell it through an outlet or discount, or to a secondary market.

As a last resort, Zalkin will donate the uniforms to companies that will accept excess inventory and hell take the tax deduction.
Or if its real old stock, we give it to the Salvation Army and the Goodwill, he says.

Before all of this happens, we will probably first mark it down in the store, reduce our normal profit margins and try to sell it at a reduced cost, or every so often, put an incentive on it for our sales people to sell it, he says. Ive got them out doing suggestive selling to try to move the inventory if were heavy in it.

In suggestive selling, the salesperson shows the product to the customer, fitting the customers needs to the product and shows them the benefits of the product.

Ron Campbell also favors the approach of moving excess inventory through his sales staff.

He is the president of Nye Uniform in Grand Rapids, Michigan, which provides uniforms in career apparel, shop apparel, medical health care, public safety, security, transit and industrial work.

Though Campbells company prefers to manage its inventory to the point where there is no excess stock, there are simply times its unavoidable, such as in white goods, where styles change.

In the nurses apparel, we do run into that problem, but we have found there is always a price point of which that product will sell, he says. We are able to move that product. Thats really the sweetest part of our business. We have high margins and we can reduce it to the point where there is always a point of sale.

Like Zalkin, Campbell finds the most effective approach to overstock is to offer bonuses and commissions to its sales reps to move the products.

In most cases, we are able to reduce it to a point where its tolerable, he says.

Linda Schwartzbauer owns Corporate Mark in Shoreview , Minnesota , a company that deals in bike patrol, career, housekeeping, public safety, security, reflective safety, and workwear uniforms.

She says overstock sometimes is an issue her company and may have a financial impact. There are items that Schwartzbauer cant even donate as a last resort: the company stocks uniforms for police and fire departments and if too many larges are ordered, the warehouse is stocked with already decorated large merchandise.

We cant give it to the Goodwill, so basically well find somebody in a sheriffs or police department, say it is overstock and mark it down, she says. Undecorated goods are given to Goodwill or to a charity here in Minnesota that accepts excess clothing.

Schwartzbauer has considered moving excess inventory through the Internet, but concedes she doesnt know enough about it to do it. She knows theres a good market for it on the Internet, and would be willing to have someone sell it for her and keep a percentage.

Other companies are investigating the Internet as a suitable way of moving overstock. One such company is Lewin Uniforms in Wayne, New Jersey, where owner Glenn Lewin says hes bought irregulars and has some sizes that wont move.

Until now, the inventory has sat in the warehouse.

It doesnt go bad, he says. It just sits and you have to wait it out and then it will move, but it does sit in the dead inventory for a while.

But nobody really wants dead inventory, so he, too is working on selling it on the Internet through such sites as eBay.

Those who deal in school uniforms find that style and color changes can affect inventory.

Mike Brushett, vice president of Uniforms by Sharon in Fayetteville , North Carolina , says his company tries to control overstock by carrying a variety of styles from year to year. In addition to school uniforms, the retail operation also provides uniforms for the postal, medical, corporate, housekeeping, and security sectors.

One may be more popular than another and what we might expect to sell this year we sell because it sold well last year color or style-wise, he says.

Students may favor navy one year, khaki the next.

We figure the predominant style is going to be popular based upon last years sales, he says. But at times we still end up with more of a particular style than wed like to have. In some cases, we have overstock in items we dont care to sell.

Sometimes, clothing that is not selling well is donated to a charitable organization that provides clothing to needy children.

At other times, the company may have a 10 or 15 percent off sale for in-stock items over the winter months, traditionally a slower time for school uniform sales.

That will help get rid of some of the stuff we still have and yet, keep us stocked enough to go through the springtime when the next season starts up, he says.

Brushett also has utilized websites for overstock items and says he does not make a profit from it, because he is offering the wholesale price he made.

Chadd Hunt is the managing director for Frank Bee Uniforms in Bronx , New York, a company that does a brisk business in school uniforms. He says his company doesnt have much of a problem with overstock because of seasonal ordering.

We try to go up over last years sales with regard to sizes, he says. Where most retailers run into problems when it comes to closing would be in the slim and husky sizes.

The majority of Frank Bees clothes are manufactured in the United States. Hunt sees a trend in some parents opting to buy school uniforms that are made cheaper overseas and the smaller uniform guy gets stuck subsidizing the larger kids or hard-to-fit kids. Its a tricky balancing act, but weve been in business for 47 years and were able to do it.

Hunt says his company makes use of the Internet for trying to move overstock.

The Internet is slowly becoming the bulk of our business and just with that and people constantly ordering, its constant turnover, he says.

Not everyone is sold on the idea of Internet sites for moving overstock, either because they dont understand it, or due to the fact that it isnt serving their purposes well.

Such is the case with Christie Pompeii, owner of Christies Uniforms in Niles, Ohio. Her company provides uniforms for law enforcement, fire and rescue, postal service, health care, food service, schools and work through retail and catalogue.

Overstock is a problem for her company on occasion, she says.

A lot of times, we have to order in bulk or in minimum orders and sometimes departments change the color or style of the uniforms and we get stuck with them, because we stock them for the customer, she says.

Pompeii doesnt like the goods sitting around in her warehouse, so typically, shes addressed it by trying to get rid of it at cost or take the loss.

In trying to get the uniforms moving, her company sends out flyers to law enforcement or fire-rescue departments that primarily wear them or contact other departments to ascertain their interest in buying them at discount.

These days, Pompeii is taking a new approach by investigating the use of the Internet for moving the material. Even so, shes not entirely sold on the idea.

I know there are a lot of places on the Internet now that will buy overstock, but sometimes its not worth my while because they give you a few cents for an item that you paid $50 dollars for, she says. Id rather eat it than go through the trouble.

Some companies merely keep the overstock around.

Ram Flores, president of Aim Uniforms in Corpus Christi , Texas, concedes overstock eventually sells, but not as quickly as hed like. His company deals in both retail and catalog sales of uniforms for law enforcement and fire-rescue departments, among others.

Some of it is a little older than wed like to have around, he says, adding hes tried every avenue from traditional sidewalk sales to the contemporary approach of the Internet, but hasnt quite found the quick fix yet. Were trying to find other avenues to get rid of it.

Although it is somewhat of a financial liability, Flores keeps the overstock around.

Its not killing us, but its not helping too much either, he says.

While school uniforms present the most challenges in overstock, Frank Bee also supplies uniforms for two industry sectors for which there is no overstock problem: the entertainment industry and the military industry (The company also services career, chef, housekeeping, health care, public safety, security, transit and industrial sectors).

The company found in the time leading up to the invasion of Afghanistan, many reservists were just given two uniforms with which to go off to war and were asking the company to do special drop ships for them so they could get outfitted to serve the country.

Sometimes we get consumers who want to buy camouflage for their husbands so they can go hunting, but the Pentagon beat them to it, he says.