Taking care of the range that is being discontinued is a challenge. In the last blog I described the way we handled it in the Linköping store. Now I will give you an example of when we succeeded in our goals only to discover that we have failed in reality.
The best way to ruin news launches
My first discontinued round or “outgoing” as we called it in IKEA was tough. The central purchase organization had gone overboard with commitments and purchase agreements and we literally had a mountain of textiles to take care of, especially bed linen and sheets. We pushed these goods really hard, slashed prices so low that it was ridiculous. A sheet cost €0,5. At the end we moved the mountain together. It was fun, exciting and exhausting at the same time; one of the many reasons IKEA is such a great place to work at. People bought sheets for their bedroom, the kid’s room, the guest room, their sisters, brothers, mothers, fathers, sons, daughters, you name it. They even stocked up so they could give some as bonus Christmas gifts (the sale was in August). At the end of the sale I guess that 95% of the people in the region where sleeping on an IKEA sheet. Fantastic result wouldn’t you say?
Not really! We cleaned up the sales space, restocked the new articles with their modern colors, textures and prints and we sold…nothing. Of course not, we just flooded the market, what did we expect? It took us 4 months to recover, and then it was time to plan the next outgoing round. This time it was less, but I the last round had an effect on this round as well and it was still had a painful amount to take care of. Since I later took over the forecasting system I can say with certainty that the initial forecast of the news had not taken the sales effect of the mountain of outgoing into account, and the contracts with the suppliers had to be renegotiated during the sales period. The Textiles department had to dig deep in their margins that year.
Be clear on your goals (is it to clear out stock or to sell news).No matter how much you want to protect your investments in the supply chain, you cannot jeopardize your sales.