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National Association for the Exchange of Industrial Resources


Children’s retailers, are you suffering from inventory headaches? Five ways you’re triggering them.

Do children’s retail products inventory managers enjoy a good headache? Why else would so many waste time, drain profitability and divert focus away from core business priorities by mismanaging excess inventory? Whether you prefer a pounding or splitting headache, here are five surefire ways to trigger one now or later. By relying on these common strategies, you might as well just be banging your head against the wall anyway.

  1. Make like an ostrich…put your head in the sand!

Ignore a problem and it will surely go away, right? Just put off decisions about what to do with your slow-moving children’s inventory. You can deal with the growing inventory, expenses and taxes later.

  1. Lease additional space.

Out of sight, out of mind. Lease additional warehouse space and spend your company’s money by contributing to the profitability of storage and logistics warehouse companies.

  1. Liquidate.

Go ahead, sell excess inventory at a dime or pennies on the dollar. Or better yet, give it away to employees as a bonus, and watch it pop up on eBay or in other secondary markets. Then wonder why old inventory is competing against your company’s efforts to sell current stock, why everyone seems to be waiting for your next giveaway or price reduction, or why you’re fielding calls from unhappy customers because your inventory is cutting into their sales and profit margins.

  1. Continue selling it.

Do the same thing over and over again – maybe you’ll be the first person to get a different result. Children’s items are outdated and stale, sales are stagnant, but hey, maybe things will pick up.

  1. Send it to a landfill.

You must really be looking for a public relations headache. Because when the media finds out that your perfectly good merchandise is taking up space in a landfill, you’ll have a doozey.

Seriously, though, don’t you already have enough headaches?

Luckily, there’s a way to eliminate inventory headaches without even popping any pills, and it’s a solution that turns a problem like excess inventory into a positive – for the company’s reputation and bottom line.

IRC Section 170(e)(3), a little-known section of the tax code, allows Regular C Corporations to donate excess inventory and receive an up to twice-cost federal tax deduction. Donating your excess inventory to a gifts-in-kind organization not only will significantly reduce your tax obligation, it will get your excess, non-selling products into the hands of qualified, deserving nonprofits across the country.

Gifts-in-kind organizations solicit donations of valuable, new merchandise from American corporations and redistribute that merchandise to their members, which include schools, churches, government agencies and other nonprofit organizations in need of supplies. The donation process is easy, secure and flexible, and many gifts-in-kind organizations provide a range of free services to donors. They can accept shipments of supplies ranging from one box to dozens of truckloads, and in many cases, the freight charges to ship a donation to a gifts-in-kind program also are tax deductible. They also offer a great solution for companies that are consolidating warehouse locations. Gifts-in-kind organizations keep detailed records of merchandise donations and redistribution, so when tax time rolls around, companies know exactly who received their products and how much they received.

In addition, provisions in the tax code stipulate that donated product cannot be resold, bartered or traded and must be used in a manner consistent with the charity’s mission, which means your product won’t find its way back to the open market. Companies also gain brand protection through their donations. The allocation system for gifts-in-kind donations ensures that the products are distributed across a thinly closed market, providing protection from the brand and product devaluation that can occur when extra inventory ends up in the open market.

Typical Donation Items

  • office supplies
  • class materials
  • clothing and shoes
  • maintenance items
  • tools and hardware
  • toys and games
  • computer software
  • sporting goods, books, tapes and CDs
  • arts and crafts
  • personal care items
  • holiday and party items
  • janitorial supplies
  • and more

Many companies also take advantage of gifts-in-kind programs to manage items such as underperforming SKUs, discontinued models or colors, seconds, buybacks and returns.

Gifts-in-kind organizations offer a simple, pain-free cure for any inventory headache.

Guest Blog by Gary C. Smith

Gary is the president of the National Association for the Exchange of Industrial Resources (NAEIR), a gifts-in-kind organization based in Galesburg, Illinois. They like to say they are “in the Business of Empowering Generosity,” supporting communities by collecting merchandise donations from generous American corporations and giving it to those who need it most. For more information, contact NAEIR at (800)-562-0955 or donor@naeir.org, or visit www.naeir.org.

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