Turning Excess Inventory into Cash Flow: Smart Strategies for Footwear Retailers with Melodie van der Baan

In this episode, Melodie van der Baan, co-founder of MaxRetail, dives deep into one of retail’s most persistent challenges: excess inventory.

Rather than starting with her background, Pete will immediately lead with a thought-provoking question to set the stage for a conversation packed with actionable insights.

Listeners will walk away with:
✅ A better understanding of how excess inventory impacts their business.
✅ Practical strategies to efficiently manage and liquidate stock.
✅ Clear insights into how platforms like MaxRetail can help streamline inventory challenges.

Learn more about Max Retail:
 Website: https://www.maxretail.com
Connect with Melodie: https://www.linkedin.com/in/melodie-van-der-baan/

Connect with Host Pete Mohr:
 Website: https://simplifyingentrepreneurship.com
Podcast: https://www.thefootwearretailer.com
LinkedIn: https://www.linkedin.com/in/petermohr/

Want to join Max Retail? Click here!

PLUS: Whenever you're ready, here are 3 ways I can help you move from the Operator’s seat to the Owner’s seat in your business:

1. Take the Value Builder Assessment to better understand the areas of your business that add the most value to your business - Click Here

2. Uncover your Kolbe. Whether just for you, or for your full team, better understand leadership strengths and ways you can advance your People - Click Here.

3. Listen my other podcast Business Owner Breakthrough podcast as well for quick tools and tips - Click Here

Transcript

0:00

All right. It's so great to have you on the footwear retailer podcast today, Melody. Thanks so much for joining me. Well, thanks for having me. You know, Melody, folks that are listening, Melody knows retail. She's been a retailer, she has sold shoes. She's just not going to talk about shoes here. But, you know, I know you're not doing that these days, Melody, but you do have the background in shoe sales and in women's clothing, all this different stuff from that. And, and you've morphed into technology with Max Retail. And I'm excited today to really get into all of the things that make up your current business at Max Retail in helping hundreds of retailers and just a, a boatload of different footwear retailers too, clean up their excess inventory and get back their cash flow. And I mean, isn't that essentially what Max Retail is all around? Exactly. And you know, the whole reason I became this technology leader was not because I knew anything about technology, but because I knew that we had a problem with inventory that wasn't selling in store. And I think everybody on this podcast knows what it's like to buy a pre pack and then suddenly you see a size 36 still sitting in the back, a size 41 haunting you, and you're just hoping and hoping that that customer with the size 11 foot is going to walk in and buy all your 41s, but how long's that going to take? And so essentially I went on this journey a couple years back to create a platform that could help independent retailers get their cost back on past season inventory. Those onesies twosies that are really just taking up all the space in our storeroom and they'd be better off as cash. You know, as we're recording this here, sort of mid April, everybody's packed away all of their winter stuff. Now for those of us, and I know you're down in Florida, but for those of us in the northern climes, you know, packed away your winter stuff, relayed out the store for spring and all of that, and these things kind of find a way to the basement, find a way to the back room, find a way to the storage unit and whatever, you know, collect dust for a season. And we're thinking in the back of our head, oh, well, we'll get it back out next year and we'll have another opportunity to sell it or whatever the case. And maybe sometimes that's the case if we're actually returning those particular SKUs. But for the ones that aren't returning, I mean, they may live on, on sale on our website or whatever the case is. But the chance of selling them from the back room and the chance of selling them from even our web store, on sale, whatever the case is, if we are, if we're web store enabled, is minuscule compared to the power of what you can provide through Max Retail. I mean, give us the different channels that you cover and sort of the expanse of. Once something goes into the Max Retail system, how does it hap, how does it get laid out, how does it get packaged, how does it get sold? And what's the process involved for a retailer out there? Sure. Well, let's, let's start with that perfect example of, hey, the season is really come to an end. And we know this because it is now sunny and warm and we have all of these boots that are really heavy and they're just not sensible to even have on the floor anymore. That would be a time where you tag that item in your Shopify store and you put a little Max Retail tag on it. And that lets our platform know that you need help selling that item. And that's fine. You can go ahead and move those boots to the basement. Right, no problem at all. But what we're going to do on Max Retail is once we get that alert from either Lightspeed or Shopify that, that you need help selling it, our technology is going to enhance the data that we received. You probably just put, you know, the brand name, maybe the style number, what sizes you have available and your wholesale cost. But we're going to look up, hey, what is the, the lining of this boot? Is it waterproof? How does it run? We have to pull together various images because what we're doing is we're preparing this boot to be sold online in areas where there is still consumer demand. We have partnerships in Latin America with a platform called Tiendemiya, where we sell a lot of footwear. Why? Because it's opposite Hemisphere and our summer is their winter. We have partnerships in China with a site called Beyond Style. And yes, they still want your boots even when you don't. We have various partners in the States as well. But what we're doing is depending on the brand, the category, the price point. We're going to place these products where there is affinity, right. Where there are customers who want those same brands, categories, price points, and that is seasonally relevant. And that is the magic of Max Retail. The beauty of it is for the independent retailer, they don't have to be bothered by any of it, Pete. They just add that tag and then they go about their business and go to sell as many sneakers, sandals as they can now that the weather has commanded them. And then they just get orders from Max Retail, approve it, ship it out with the prepaid label we provide, get paid as soon as that label is scanned. Done and done. You know, I was talking with Mark Denkler, president of the nsra and even when you mentioned those core styles and we might order them every year, Mark was telling me that he would still put those on sale at the end of the season because he wanted the cash to get two more turns in before that core style came back again. And that's something that we don't always think about when we're holding inventory, saying, well, we might be able to sell it next winter. To be honest, you might not. Right. If it's something that's not core and even if it is core, if we look at an item of inventory as, as a financial investment and the opportunity to increase turn, it's kind of like we have to see inventory as money, not style. Does that make sense? It totally makes sense to me. I mean, when we look at our open to buy and I'm in Canada and so in Canada it's a little bit different. A lot of the manufacturers don't carry as much in stock as they do in the States. So our open to buy is a lot smaller as a percentage of our overall buy. And so many of our buys here in Canada are future oriented. You know, here as we're recording this in April are Birkenstock order for next year, like that's going to be delivered full 12 months in advance. We haven't really even started selling, the bulk of Birkenstocks is due. So even when we look at excess stock, Melody, you know, if I'm stuck with 10 pairs of size 39, but I really only need six for the season because I've had to order a year in advance and I don't really know what my sell through this year is going to be at least. Last time we spoke you weren't servicing Canada yet, but excited to have you come here when you're, when you're ready. But for those in the States, those areas of balancing stock I think is a really interesting thing, balancing stock both for your cash flow and for the futures of all of these things. When we are forced with certain brands to carry futures and not be able to source in season and not be able to sort of predict what we're overlaying, if it's a returning style and things like this it really becomes a battle as to sizing and with even within that SKU count as to making sure that you have the right amounts at the right time. Right. It's all about this planning, image inventory planning and how you can help us clear up that stuff is such a vital piece so that we can take those dollars and put them where we need to in the season that we want to. Absolutely. And even on that note, just to point people in the right direction. Richie Saner wrote a great book about making sure you have the right items in the right quantities at the right time to sell fast. You know, he's been a planner with a specialty in footwear for many years. I don't know if you know him personally. I do, absolutely. And the name of his book is escaping me right now. I don't know if you know it, but it's. I don't know the name of his book. I know he's getting back to the nsra. He's a regular contributor to the NSRA magazine, shoe retailers today as well. So. Yeah, and I know Richie, Richie's helped us in several years ago too through some major inventory issues that we were going through as we closed one of our stores. So I just found it. Retail revelations. Yeah, that's it. I remember it now. But I do encourage any footwear retailer to buy this book because it's essentially all of his essays compiled together and I would say half of them are related to footwear planning. And Pete, I would say 90% of my customers are in that same boat you just explained, which is we have to buy so far in advance and yet we do not have a crystal ball. Which is why being data driven, as hard as it is to take a step back and look at what's going on in our inventory, it's crucial when you have to plan ahead so far. But you also, in addition to having great data and the ability and time to look at it, you got to have a parachute plan. And that's why we built Max Retail. We work with some of the most amazing forward thinking retailers in the country and they are the best at planning. They, they leverage planners, they leverage blacks, Retail Management one all these other amazing companies and they use Max Retail because planning can tell you how much you need. Right. And when you're at risk of having too much, but it doesn't solve that problem for you. And that's what we do. When you have too much of something and you need to get out of it, that's where Max Retail steps in. You know, it's an interesting thing because even our teams, when they know there's all of this stuff that isn't turning in our stores, it's demoralizing for them too, because they feel, you know, salespeople want to sell and if they know that there's something sitting there that they've tried many, many times, it just isn't whatever, for whatever reason, it isn't hitting home. Even moving something out from that perspective is going to allow our teams to focus on the stuff that they want to focus on, not on the stuff that they feel they have to focus on. Whether, you know, they're being incentivized to move this stuff out or whatever and still can't move it out. There does come a day where it just has to leave the building. And I see that a lot. I see a lot of footwear retailers specifically who wait too long, way too long. And then they look at liquidation, which is pennies on the dollar. Max retail gets 85% recuperation of wholesale cost. Liquidation is going to give you 10 cents. And it just, it blows my mind that we just push it to the back of our mind and then we're like, oh my gosh, now I just have to solve it. But it's like we've got to just have our strategies in place of how do we sell our full price inventory so that we have less excess. Right. I think that's where it all starts. Pete is going to the front. Am I properly promoting what's newly arrived? Have I sent out my email blast? Have I shot video content? Have I clienteled to everybody who buys this brand, who buys this size Right where it looks like maybe I do have too many 39. Let me just call my 39 shoelace. Right? Yeah. Have we done our part? Because I think when we look at excess inventory, sometimes it's because we were just too busy inventorying it and being active on the floor that we're not doing the proper actions to sell through more of it faster to where at least, hey, man, now if 30 days comes on and we don't have a 50% sell through, we at least know we tried everything in our power. But to your point, if on day 30 we realize we don't have a 50% sell through, but our steam is already kind of fizzled out because it's no longer new and our sales team, like doesn't have that same momentum for it like they did 30 days ago, it's going to be harder for us to sell it in the next 30 days with all of our new arrivals and have our processes in place for how we're promoting so that we know when it's time to call it. You know, I would say on Max Retail there are certain brands that you cannot discount until a certain point of time. Right. So just knowing like, hey, what is the date that I can finally take action on this particular brand and product and then there's other brands that just don't care and after 10 weeks, if you're still looking at it, you should be taking action. So I think it's just knowing where your brand stands in terms of when you can discount and knowing which brands give you full laser fair. Right. And being mindful. It's been 10 weeks, I have done my part, promoted my products to the max and I am still looking at way too many. Come on, put it on Max. Yeah, I think that's really interesting because so many of the brands, I mean, we own two shoe stores still. And from that perspective, so many of the brands we carry are map priced or MSRP depending on how you want to say it. But you know, basically the prices are pegged there until certain dates or sometimes year round, whatever they may be. But the interesting thing on the back end of Max retail is that, you know, for those of you who are listening that say, well, if I sell, let's say my Merrells or I, I put my Merrells into Max, what would happen if another vendor took them that wasn't Merrell approved? But you've already got all that ironed out, don't you? That's exactly right. So on Max Retail, every retailer's login is specific to their authorized brands. For instance, you would need to list Merrill inventory for us to know that you carry Merrell. And we carefully that all of our sellers that come on platform, you can't just go to our site and sign up. You can go to our site and fill out a form and someone is going to call you. We're going to research your store and we're going to qualify you and then we will activate you on our platform for the brands that you are authorized for. And so that's what keeps it safe. And it's fantastic because then if you do need, you know, the extra 40 in the Merrell boot, then you can go on and see if another retailer had some extra units and you can pop it, grab it right there. But it is extremely important to us. It's always been a core pillar. My background is as a distributor. For five years I placed brands into retail stores and so it's always been very important to me because I understand how distribution is, is important and needs to be protected. But then I also became a retailer, right? And then I was that for nine years and I did spend 40 to 60 thousand dollars on a given brand of shoe so that no one near me could have it. And so we have to take all these things into consideration as we build Max retail, because at the end of the day, this is a really specific community with specific needs. I always say that it's almost like we are our own culture, we have our own language, we have our own retail traditions, right? Like, it's interesting. We have our own holidays, for crying out loud. So it's just kind of interesting. But if you know it, you know it, and if you don't, you don't. You know, it's. It's such an interesting thing when we look at a lot of these things. So the, the back end of max retail, you've got this, you know, you can supply the suppliers essentially to the end consumer, but the other side is that you have a whole direct to consumer retail side of things too, right? And why don't you tell us? So if another vendor isn't picking up that Merrell and it's not going to go out through that platform, what happens then? Melody? So once your inventory is severely aged and it's on Max retail and we are like, hey, this is a boot. To the point that I was making, this is a boot and we're in July, where are we selling this boot? Right? We're always going to look at the e commerce sites that are going to give us that opposite hemisphere advantage, right? So we are going to work with e commerce sites in Latin America. You know, when we have sites live in Canada. At this moment, we don't have sites live in Canada due to a couple different reasons, but that was a great outlet for getting boots to Canada in the summertime, right? They were still buying them. It was amazing. Like I mentioned China. But also we work with resale marketplaces like Poshmark, right? And like ebay, when it's that very last unit and it's three, four seasons old and it's someone's favorite boot, Pete, and someone bought it, you know what I'm saying? And they're like, oh, my gosh, I wore my boot out. Let me go on Poshmark and see if I can buy my same boot because the vendor's not making it anymore. It happens so often. You know, brooks has the ghost 14, then the 15, then the 16. And somebody says, but I really like the 14 and have that back, but it's not available. So what do they do? Right. They can. This is another avenue for them to go and see if there is one around. Pete, that's a perfect example. And that is how it goes. Because that retailer in Dallas, Texas, who still has it in their back room all those seasons later, and they just wish they knew who wanted it. Right. And the Internet is a big, wide place full of people looking for that purchase from a couple of years back to find it again. And so it is one of my favorite things to see old things sell old things, find their home, because it just shows there is a but for every seed, as my mother would say. Yeah, for sure. You know, we're a Shopify house. And so when we. You had said, just go onto the product, tag it with Shopify. So whether you're Lightspeed or Shopify or Imagine or Rick's, in the footwear retail side of things, Rick's was another big one. I'm sure you've got linkages with all of the different point of sale systems that make things happen in the footwear industry. I know you're. You're big in inventory management and reporting. And when we talked one other time, you had mentioned this idea or I said, when do you actually go through all of the stuff and tag? And you said, well, I kind of came up with Max Monday. So why don't you tell us a little bit about Max Monday and how you would go through the footwear owner's sort of headspace as to when it's ready, how do they look for stuff, how are they going to tag it? And then. Then how's it going to get onto your. How long will it take once they tag it to get onto your platform? Absolutely. So I think the first step is just if we focus on, hey, what are our really important brands where we have to honor the map timeline. Right. I would say when you receive a shipment. Right. January, I think, was when everybody got their new sneaks in. Right. From certain brands, it was either January or early February. I would actually go in my company calendar and I would put the date that I am allowed to mark down in my calendar because that way I'm talking to my future self. And for me, I'm always wearing a lot of hats. I'm super busy, slightly disorganized, so I have to constantly be talking to future Melody. And so when I have a shipment come in, I'm going to put a calendar reminder. So on that Max Monday, maybe it's 10 weeks out, like I said. So if I got all my shipments in on the last week, Right. I'm going to be like, okay, in my calendar max Monday. And I'm going to put some way for me to know what I need to go and analyze. Okay. Because I don't need to look at everything. I just need to look at what is now aged and how much of it did I sell. Right. Yeah. And so I would say make a future calendar event, Add yourself a little agenda for how you need to spend that time and what you need to go and look at, and then you just make it on Monday. You block out your calendar. A lot of my retailers find Monday to be their admin day. Right? Yeah, for sure. Admin doesn't just have to be running payroll and making the schedule. So I like to say there's two things we need to do at all times. We need to put air in the tires and we need to put gas in the car. Air in the tires is making the schedule. Air in the tires is paying payroll. Air in the tires is, you know, saying yes to the shipments that are shipping. But gas in the car is when you look at your inventory and you see what did I blow through that I need more of and what am I still sitting on that is now at risk for me to be looking at it for the next six months. Okay. And then going into planning, future planning. Right. Like, what are my upcoming markets? Okay. Well, looking at the markets is going to be air in the tires, but what new brands do I need to go in? Source is going to be gas in the car. And so when we look at our max Monday, we are not looking at air in the tires. That's the stuff that you're already doing. We are looking at the gas in the car activities that are going to propel your business forward and make it not just another day or another month with standard steady sales. This is how we're going to grow our business. If you could wave that magic wand for retailer listening today, who's never heard about your particular organization or how things work, what would you do for them to sort of just say, if you could do this one thing today? Because this show is all about actionable steps and how we can take action to improve our business, improve our lives, improve our stores, improve our teams, improve our product, all of these different things. But if you had that magic wand, and you do right now through this podcast, what would you say is the biggest thing that they could do to get some of their Inventory, you know, straightened away and the biggest habit that they could create if they don't already have it, in order to get this going. I think the starting point is knowing where you're at. Yeah, right. In order to start, you have to have a. Where. Where is my mile marker of today? And to me, the very first mile marker is running that report of aged inventory. Pete, how much of my inventory has been store for 30 days or less? How much of my inventory in store is between 30 and 90 days? And how much inventory in my store has been in there for more than 90 days? And you want to look at this and a dollar amount, and you want to look at this as a percentage. And your goal is going to be to shrink that percentage of 90 days plus inventory to a smaller portion of your pie. And you want to grow the other two. The 90 and less. The 90 and less day inventory is what we want to grow. So those two chunks we want to grow, but we want to shrink the 90 plus days because if we just look at our inventory and these, these proportions, you're going to increase your turn by shrinking that portion. How do we shrink that portion while we shrink that portion? By using max retail. If you've got inventory that's been in store for 150 days or more, you need max retail. You do not have strategies for getting rid of your aged inventory. Let's just call a duck a duck. Now, how are we going to increase the other portions and shrink? Well, we need to bring in more inventory faster. Right. In order for us to dilute the old, we got to bring in more of the new. And if we're going to bring in more of the new, we have to have our strategy in place to promote that new. But I encourage all of you, take the first step, look at your inventory by age, and segment it 30 days or less, 60 to 90, 90 days plus. And you know what? Yeah, knock yourself out. Give yourself a fourth bucket. 150 days plus. If we really want to have that moment of realization of where we are losing out on making money, we've already lost the money. We've already spent it, Pete. That money is long gone. We spent that money 150, 365 days ago. It's really interesting because when you start looking at your inventory this way, and whether you're looking at it by department or by brand or both, and overlaying them both, whatever the case is, when you're going to talk to your reps about success within the brand and within the departments of your Store. But I think the big thing, Melody, is that, you know, as we're recording this, there's the big R word out there, you know, might be a recession, all this stuff, there's all sorts of different talks about troubles and trials and all the different things. And we go through ups and downs, everybody does. It's just normal in business and in life. But ultimately one of the things that can really kill a retailer is cash flow. Absolutely. And cash flow isn't profit. And for, you know, not everybody's, you know, as deep into their numbers with profit and loss or balance sheet, what's an asset, what's an income expense and what's cash flow. But ultimately cash can kill. You can still be a profitable business on paper and not have any cash to pay the bills. And if you don't have cash to pay the rent and the landlord comes looking and the vendors come looking, even though your profits showing you're profitable, this, this can create problems. So when I look at what you do is you're allow an easier stream to cash. And in times of need in particular like this, why wouldn't you want quicker cash? If you have quicker cash, then you have the ability to pay those bills in a timely matter, even in times that are a little more testy, let's call it. So. And we need to have these mechanism. It's like a lever really. It's like a lever when you pull that lever or somebody pushes that button on MaxRetail and buys that product from you. It's a, it's a cash in the bank. And that's what I love also about your program is that like you said, as, as the packing slip is scanned, the cash goes in the bank. It's so easy. Absolutely, Pete. And you know, I just want to remind everyone of two things. Recession or no recession, price increases due to tariffs or no price increases because all this blows over. No matter what the case may be, you've chosen to be a retailer and retail is the buying and selling of inventory. And we don't get an option as retailers to pull back and be safe because we don't make money if we don't buy and sell inventory. Which just means we gotta sharpen our tools, Pete, because this is our industry. We will ride out every storm. We will ride it out together. We will share knowledge. But we have got to have our strategies and our tools to remain profitable. Not get by. Getting by is not enough. So the second thing I want to share with the community is your storage room, your backstock, that stuff that you put away. That's money, man. That's opportunity. Right. And I'm not asking you to have to work on it and figure it out. I'm telling you that there is a committed team of people. We have 50 employees here at Max Retail. Half of them are technology enthusiasts. And all they do is try to find ways to sell what you can't sell. That is what everyone at our company is here for. Because we want you to go and focus on the new and those relationships with your vendors, with your customers, with your employees. But we want to propel your business with that backstock. I love it. It's like reframing your stockroom struggles. Absolutely. I mean, money. Yeah, money. Let's pay rent with the sale rack. And let's pay everything down. Let's get in a good financial position, because when we're in good financial positions, we can weather the storms, no matter how big or small the storm is. It's such an important piece of longevity for your business and for the future of your business. As we roll through these. We've been through it before. We've been through Covid different ups and downs 2008, you know, all these different things. And many retailers out here have been through the ups and downs, been at it for decades. And whether or not this one's a prolonged one or a short one, it doesn't matter. We still always have to move. Like you said, that product, we always have to turn it back into cash. And the rate at which we turn it back into cash is going to help us advance even further. So, you know, thanks so much, Melody, for being a part of the footwear retailer podcast here today and joining me again, because I'm so happy you spent the time, because this is an important message for the footwear retailers out there, and I'm so glad you spent the time. Any last words or pieces of advice before we wrap this one up? I would just say, remember, my friend Dan Jablon says if your customer sees this month what they saw last month, they're not coming next month. So just stay focused on keeping your assortment fresh, keeping your customers engaged, and calling a dog a dog, as we say here in footwear. Absolutely. The shoe dogs. Shoe dogs are the people, but the shoe dogs are the ones that are sitting in that bathroom that we got to get rid of. We know that one. That's a dog, right? It's funny. And when I'm talking to apparel retailers, you know, I call it a duck. Yeah, sure. But when I'm talking to the shoe retailers, you know, they'll call it a dog, but I will say, you know, just don't be, don't be afraid. You've done this before, you'll do it again, and we'll do it together. Awesome. Melody, if anybody wants to reach out to you or your team, how do they get ahold of you? You can just go to MaxRetail.com and Pete, I'll also give you a link that you can share on your site or with this podcast. And that way, if anyone wants to get in touch with us that way, you can find one at the link that Pete makes available to you to watch this. Thanks so much and we'll talk to you soon. Melody, make it a great day.