5 questions to ask before discontinuing a product

But then you put yourself back in the shoes of the merchant and recognize that there’s probably a very logical reason why the store is no longer selling your favorite product. After all, business owners don’t just randomly decide to eliminate certain SKUs from their shelves. Perhaps it’s simply no longer available. Or maybe its wholesale cost has risen dramatically, making the item unprofitable. It could even be that the clientele or the store’s product mix is changing and the item no longer fits in.

Of the many difficult situations merchants find themselves in, knowing when to discontinue a product can be one of the more challenging to navigate. Read on to learn the five questions smart business owners should ask before eliminating something from their inventory.

1. How popular is the product really?

It seems as if customers are always raving about how much they love the item. But do all consumers love it? Or are simply a few obsessed? When several shoppers are extremely vocal with their adoration, it can skew your knowledge about which inventory items are popular and which ones aren’t. To identify your bestsellers, you’ve got to go right to the source—your sales metrics.

Clover’s reporting and analytics tools give you the data so you accurately know what’s flying off your shelves and what’s lingering longer than it should. The data can be give you the knowledge you need to help make better business decisions.

2. Is there any scenario in which you should consider selling the product?

Insights might reveal that the product in question has a small, but extremely loyal fan base. If that’s the case, it could make sense for you to keep the product available—under special circumstances. Some suppliers will give merchants in good standing the ability to place special orders (with no minimum purchase required). If this option is available, it’s a smart way for businesses to give their best customers a little extra for little to no cost. You also might be interested in continuing to stock the item even if its profit margin has disintegrated because of rising wholesale costs. Consider raising its retail price so that it’s profitable again. Devoted shoppers are likely to pay a higher price in order to get what they love.

When discontinuing an item because the supplier is phasing it out, you might consider locating another wholesaler. How do you know if the work involved is worth your time? If a competitor has the same or a similar item in his inventory, compare your business to his using Insights. If you’re neck-and-neck, don’t just cede the sales. Do the research required to find another supplier.

3. How will you break the news to your customers?

As a business owner, your job is to recognize that your actions are bound to upset some shoppers. When discontinuing their favorite product, it’s important to keep their emotions top of mind when determining how to spread the news. In some situations, an in-store sign might be the only communication you need. In other instances, however, personalized communication is best. If the product will only be available via special order, use Promos, a free app by Clover, to retain loyal fans. Send a personalized message via text, email, Facebook, or Twitter that informs them of the new process, plus a discount offer on their first special order.

While you may be disappointing some of your customers, discontinuing a product can also be an opportunity to engage with your larger customer base. Consider launching a fun, interactive marketing program. If a manufacturer is no longer making a certain flavor of ice cream, Promos can assist with a social media contest to pick which flavor is going to take its place. Or, when your pet store’s best-selling dog bones are no longer available from the supplier, hold a taste test for all your furry shoppers.

4. Do you have a similar product to refer shoppers to?

When a shopper learns a product is no longer available, in most instances his or her reply will be, “Do you have something similar?” If the answer is no, the consumer is likely going to head somewhere else in search of the original item. If you have something in stock that you can steer them towards, it’s likely they’ll give it a try. It’s possible for shoppers to switch their loyalty from one product to another; they may even like the replacement item better. Monitor retention levels via Insights and if there’s a sharp drop-off, run an automated win-back campaign using Promos to regain lost sales.

5. Will you be losing any cross-selling opportunities?

The product you’re discontinuing could drive the sales performance of others. Once eliminated from your inventory, customers might lose interest in those accessories, services or add-ons. Use the app Shopventory to track an unlimited number of SKUs and identify any cross sellers. Then look for any patterns. For instance, you might notice that most people buy two accessories each time they buy the item you’re thinking about discontinuing. Or perhaps a large percentage add a small gift card to their purchase, which would indicate that it’s likely being gifted to someone else. If you lose these additional sales, how will your bottom line be affected? The loss could be significantly more than just the one item from your inventory list.

Savvy business owners discontinue products all the time, but it’s never wise to make the decision spontaneously. Asking yourself these five thoughtful questions can help you make the right move—both for your customers and your bottom line.

To learn more about Clover’s reporting tools, schedule a free consultation with our merchant services team today.

Editorial Team

Customer service, Loyalty, Run your business, Strategy

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