What Happens To Fabric That Doesn’t Sell Out Right Away?

As you may or may not realize, each of my quilt shop only companies (FreeSpirit, Henry Glass, Studioe & Blank) offers 55-75 new lines for sale per year. Yes, you did hear that right….55-75! In total, that is well over 220 lines a year and that doesn’t even include stock that we carry for A.E. Nathan, 3 Wishes and Stof which isn’t insignificant either. As you can imagine, our 90,000 square foot warehouse is very full all the time.

As time passes from when we start shipping a new line, patterns from each group start to sell out and the group is then what we refer to as “broken.” Thereafter, the line keeps dwindling down and at some point, it doesn’t make sense for our reps to keep selling the line because too much is missing. We encourage the reps to focus on the lines that are complete as they have so much to offer and we don’t want to bog them down with stragglers or things that might not even really be in stock.

Next, we move into our “close-out” or “promo” cadence. Here is a simplified version of the cadence:

We send our reps a list of the skus that we want them to sell from the “broken” collections. You need to realize that the fabric is all first quality so there is nothing wrong with it, but for the fact that we don’t have all the matching fabrics to go with it. But also, alone some of the fabrics are perfectly fine for customers that don’t always sell and buy fabrics by full collection. Most online retailers don’t sell by group per se so this could be a good opportunity for them to buy some slightly lower-priced fabrics. This allows them the chance to make extra margin for themselves or sell it at a lower price to the benefit of their customers.

Note that we typically lower the prices each step of the way as the inventory and assortment is reduced. In our minds, we just need to keep turning our older fabrics into cash. The bulk of our profits have already been made and now it is time to move on and focus on the newer products. We can’t and don’t expect to get full price for every bolt we sell. That would be awesome, but it isn’t a realistic expectation. Where other companies might hold fabric for a very long time in hopes of selling it at full price, we like to keep moving old inventory out as we need to continue to make room for new product as the warehouse space is limited.

Next, we will make a contact sheet (see below) with small images of all the skus that we want to sell. We will email these to customers that are interested based on them historically buying promo fabrics from our companies. This will even include overseas customers who are looking for bargains. We like it when the lower-priced fabrics get out of the US so it doesn’t interfere with our customers in the US that paid full price. With that being said, hopefully by the time that we are selling these lines at promo prices our customers that paid full price are already sold out.

Then we start moving to our undertaker customers. These are customers that buy larger quantities. In some cases, these customers buy sight unseen. For example, they will tell me to send them no more than 5 bolts of a sku and no more than 500 bolts in total. Customers that buy sight unseen pay slightly less as it is much easier for us and it helps us move through more goods of our choosing. Those that want to pick and choose every promo bolt pay a little more.

As an aside, as prices have been rising over the last year and the demand for fabric has reached such a high level during Covid, we are able to get more for our promo fabrics now as their value has risen. This has helped a lot as the price differential could be the difference between us making and losing money on these promo fabrics. There is nothing better than to make even a small profit on promo fabric.

After that, unless we were overloaded on specific skus i.e. over 500 yards, the inventory has dwindled down to close to nothing. Sometimes we will use these remaining bolts for precut assortments. Sometimes we will make them into cigars and have our reps give them away to customers as a thank you for placing orders with us. Since we are always donating fabrics to different charitable causes, these are the types of bolts that will be used for that too.

If the fabric didn’t sell out by then, the fabrics will sit around the warehouse until we can eventually get rid of them. Thereafter we have to sell off to some of the larger undertakers that don’t pay very much and aren’t very picky. In the end, it all eventually disappears…..some things just take a lot longer than others. In some really ugly situations, we can carry some skus for 5-10 years.

Regardless of that entire process, when I visit the warehouse I am always looking for stragglers that got lost in the mix and are hiding. These are bolts that we probably don’t show in inventory anymore and no one knows exists. I will work with someone in the warehouse to collect these goods and set them aside for the next clean-out. This is more important than you would realize because if we have tons of bolts that are sitting around with no one selling them, we are just tying up our cash in dead inventory. We certainly don’t want that.

That is the process in a nutshell. I hope that was helpful for you and covered all the questions. If not, please write your questions in the comments and I will gladly answer.