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Curing Businesses' St. Patrick's Day Hangover

Stocks in this article: WMT TGT

NEW YORK ( TheStreet) -- After the last Guinness has been finished, bagpipes played, jigs danced and corned beef and cabbage eaten, some small businesses are left with St. Patrick's Day paraphernalia they couldn't sell.

Having some leftover seasonal or holiday merchandise is typical for retailers, but when it gets to the point of having a significant amount of excess seasonal inventory, there are strategies to minimize a company's losses.

When St. Patrick's Day is over, there may still be plenty of St. Patrick's Day merchandise to deal with.

"If you look at big retailers like Wal-Mart (WMT) or Target (TGT) or major drugstore chains, they'll take anything that identifies with the holidays and they will put it on sale the day after at 50% off," says Ronald Benjamin, a SCORE counselor in New York City and an expert in issues related to retailing for major department stores and specialty stores.

"Customers know this," Benjamin says, and will turn up to buy.

Putting items on sale at 50% discount should at least cover the cost of the item. "That way you get your money out of the good," he adds.

Business owners can pack merchandise away to use next year, but it can be costly to store the items, both in terms of rent if they are stored offsite and in potential lost revenue, Benjamin says. Owners also run the risk that seasonal trends will change significantly from year to year.

"Smarter retailers will dump the good as fast as they can," he says.

Mike Capone, a marketing professor at San Diego State University, says business owners need to be creative with excess merchandise and find unique ways to "reinstate demand for the product."

For instance, Christmas lights could be used to decorate a patio umbrella, he says.

Excess seasonal inventory could also be sold to bars or restaurants that will at times extend holiday celebrations. Retailers should pay attention to social events in their neighborhood and see if an opportunity to sell the merchandise exists.

Another way to get rid of the merchandise is to find a discount store that will buy the merchandise off you, such as Overstock.com. While business owners probably won't make a whole lot of profit off the sale, at least it will provide some capital to perhaps buy the next seasonal item, Capone says.

Businesses in solid financial positions may want to donate extra merchandise. Charities including The Salvation Army and Ronald McDonald House are always taking donations, which will give the business a tax break to recover some of the costs associated.

Retailers can also always try to send the merchandise back to the manufacturer. Some may go for it.

"If you have a long-term relationship with a manufacturer and the retailer has overpurchased, in order to keep that relationship going, the manufacturer will take that back and apply a credit," Capone says.

To contact the writer of this article, click here: Laurie Kulikowski.

To submit a news tip, send an email to: tips@thestreet.com.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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