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Topic # 192156 29-Feb-2016 10:49
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Had bit of a giggle at Noel Leemings over the weekend..... wife killed her Lumia 520 phone, so off we went phone shopping. 

 

Pop into Noel Leemings Silverdale and in the doorway is a cabinet with "clearance" phones - they had 3 boxes which were Lumia phones, but couldnt see all the models, so asked to see them. Staff member takes them out and checks price for us.... two were fairly newer models (asking around $190) but one was a Lumia 520 still in shrink wrap.

 

Me : Wow, did'nt know anyone still had any of these left in stock

 

NL : Why is that ?

 

Me: Well, they are 3 years old now or close to it.

 

NL : Wont be that old..... (taps at keyboard) - Oh.... you're right.

 

(Im thinking, "$70, and we'll take it)

 

NL : Price on that is....  $149

 

Me : For a 3 year old phone ? Which was selling for $200 new (if looked around) anyway 2 years+ ago ? No thanks.

 

 

 

(Wife now has a Alcatel C5 - not my choice but shes happy with it)

 

 





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  Reply # 1501319 29-Feb-2016 10:51
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In defence of noel leemings, the computer says no , so they must be right. 

 

 


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  Reply # 1501322 29-Feb-2016 10:57
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surfisup1000:

 

In defence of noel leemings, the computer says no , so they must be right. 

 

 

 

 

 

 

and how many $M of DEAD! stock do they have! with that sort of attitude I would expect plenty!
bring on DSE 2.0





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  Reply # 1501333 29-Feb-2016 11:06
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hyperman:

 

and how many $M of DEAD! stock do they have! with that sort of attitude I would expect plenty!
bring on DSE 2.0

 

 

I was kidding , this is a thing from the little britain comedy series. 

 


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  Reply # 1501343 29-Feb-2016 11:29
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surfisup1000:

 

hyperman:

 

and how many $M of DEAD! stock do they have! with that sort of attitude I would expect plenty!
bring on DSE 2.0

 

 

I was kidding , this is a thing from the little britain comedy series. 

 

 



 

lol I did realize where the one-liner came from...

 

But you still have to ask yourself why they have a 3yo phone for sale $50 less than the RRP when it was new?
I would have burnt it long ago $70 is about where I would be pricing it too
If they had a little more flexibility with dead stock it would have sold a year ago...





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  Reply # 1501344 29-Feb-2016 11:31
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I'd love it if the inventory in my warehouse miraculously reduced in cost as it aged, unfortunately it doesn't


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  Reply # 1501367 29-Feb-2016 11:42
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Wade:

I'd love it if the inventory in my warehouse miraculously reduced in cost as it aged, unfortunately it doesn't


Yes but:
-It costs to keep it.
-Cost doesn't equal value.

At some point you have to say "this item is costing money and losing value, it has to go".




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  Reply # 1501389 29-Feb-2016 11:50
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andrewNZ:
Wade:

 

I'd love it if the inventory in my warehouse miraculously reduced in cost as it aged, unfortunately it doesn't

 


Yes but:
-It costs to keep it.
-Cost doesn't equal value.

At some point you have to say "this item is costing money and losing value, it has to go".

 

It's not so much that it is costing you to keep it (unless it uses power)
rather that the retail space it occupies could be used by something that is actually making you money ie. a current line

 

The other big problem is perceived value; as the item gets older the less a customer is willing to pay





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  Reply # 1501392 29-Feb-2016 11:58
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Inventory has a value, writing its stock value down is the same as losing money, shareholders get a bit ancie about that sort of thing so much red tape and BS to go through

 

 

 

Logic and finance don't always work hand in hand in bigger companies


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  Reply # 1501397 29-Feb-2016 12:07
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Wade:

 

Inventory has a value, writing its stock value down is the same as losing money, shareholders get a bit ancie about that sort of thing so much red tape and BS to go through

 

 

 

Logic and finance don't always work hand in hand in bigger companies

 

 

 

 

However, of course, inventory value of consumer electronics reaches below cost fairly fast I would imagine.

 

I see this sometimes with camera stores - they have old models at expensive prices "because that is what it cost us". They often fail to grasp that what it cost them is not relevant once the item has been consigned to history in the eyes of the buyer...!

 

I've even seen them trying to sell older models for more than newer ones because the currency was in a different place when they bought the older ones. Reality sometimes seems lacking...






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  Reply # 1501398 29-Feb-2016 12:08
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Wade:

 

Inventory has a value, writing its stock value down is the same as losing money, shareholders get a bit ancie about that sort of thing so much red tape and BS to go through

 

 

 

Logic and finance don't always work hand in hand in bigger companies

 

 

 

 

2 ways to look at it
you can have 90$M of dead stock at cost that is going nowhere occupying 1/3 of your store space (and growing)
or you can sell it at a loss and only have 10$M of dead stock that now gave you 50$M in turnover to send on new stock that is more likely to make 80$M
as the customer is more inclined to spend full price on a new item than a old one...





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  Reply # 1501402 29-Feb-2016 12:18
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hyperman:

 

Wade:

 

Inventory has a value, writing its stock value down is the same as losing money, shareholders get a bit ancie about that sort of thing so much red tape and BS to go through

 

 

 

Logic and finance don't always work hand in hand in bigger companies

 

 

 

 

2 ways to look at it
you can have 90$M of dead stock at cost that is going nowhere occupying 1/3 of your store space (and growing)
or you can sell it at a loss and only have 10$M of dead stock that now gave you 50$M in turnover to send on new stock that is more likely to make 80$M
as the customer is more inclined to spend full price on a new item than a old one...

 

 

 

 

But then you'd need either a system or people (or both) to manage and monitor this continuously, which also costs money (and I suspect a significant capital investment up-front).





Most of the trouble in the world is caused by people wanting to be important. (T.S. Eliot)


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  Reply # 1501409 29-Feb-2016 12:28
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floydbloke:

 

hyperman:

 

Wade:

 

Inventory has a value, writing its stock value down is the same as losing money, shareholders get a bit ancie about that sort of thing so much red tape and BS to go through

 

 

 

Logic and finance don't always work hand in hand in bigger companies

 

 

 

 

2 ways to look at it
you can have 90$M of dead stock at cost that is going nowhere occupying 1/3 of your store space (and growing)
or you can sell it at a loss and only have 10$M of dead stock that now gave you 50$M in turnover to send on new stock that is more likely to make 80$M
as the customer is more inclined to spend full price on a new item than a old one...

 

 

 

 

But then you'd need either a system or people (or both) to manage and monitor this continuously, which also costs money (and I suspect a significant capital investment up-front).

 

 

you already employ them!

 

1st line is your buyers; as a line gets close to end of line, drop its price and try and reduce numbers; if need be talk to the supplier and try and get a "rebate to clear old stock"

 

2nd line is your store managers!; one-off, damaged, ex-display be realistic





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  Reply # 1501513 29-Feb-2016 14:48
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hyperman:

 

floydbloke:

 

hyperman:

 

Wade:

 

Inventory has a value, writing its stock value down is the same as losing money, shareholders get a bit ancie about that sort of thing so much red tape and BS to go through

 

 

 

Logic and finance don't always work hand in hand in bigger companies

 

 

 

 

2 ways to look at it
you can have 90$M of dead stock at cost that is going nowhere occupying 1/3 of your store space (and growing)
or you can sell it at a loss and only have 10$M of dead stock that now gave you 50$M in turnover to send on new stock that is more likely to make 80$M
as the customer is more inclined to spend full price on a new item than a old one...

 

 

 

 

But then you'd need either a system or people (or both) to manage and monitor this continuously, which also costs money (and I suspect a significant capital investment up-front).

 

 

you already employ them!

 

1st line is your buyers; as a line gets close to end of line, drop its price and try and reduce numbers; if need be talk to the supplier and try and get a "rebate to clear old stock"

 

2nd line is your store managers!; one-off, damaged, ex-display be realistic

 

 

 

 

Like i said, logic and finance (departments) don't always see eye to eye, senior management are usually chasing middle management to achieve "x"% margins which can't always be achieved if dumping stock at cost or below. For the record i agree with your logic however i am yet to work for a company that approaches 'dead' stock issues with any logic at all

 

 

 

 


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  Reply # 1501597 29-Feb-2016 16:43
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And inevitably what ends up happening is that a company that thought it had $$$ worth of assets comes to realise that it is in fact close to zero. Then some creative accounting takes place...


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  Reply # 1501599 29-Feb-2016 16:52
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Journeyman:

 

And inevitably what ends up happening is that a company that thought it had $$$ worth of assets comes to realise that it is in fact close to zero. Then some creative accounting takes place...

 

 

Dick Smith anybody?

 

 


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