Set Higher Margins on Low Velocity Items

In Making Money Is Not Illegal, Immoral, or Fattening, we describe item velocity as one of three approaches to increased profitability through margin management. Here's how Art Freedman discusses item velocity:
"For this, I bring out another set of buckets, labeled A through D, with A being for the fastest selling items, those with the highest inventory turnover, and D being for items with the slowest turnover. Oh yeah, I do have two more buckets for sorting by item velocity. The X bucket is for items that have not sold one unit during the past year, just sitting there on your shelves. The XX bucket is for the items that have not sold even one unit for at least two years."
With the X and XX items, turn the merchandise into cash. Lower the sales price to below your cost if necessary. I know you might be thinking, "I'm not going to sell it below cost. Somebody might buy it someday at what I'm charging now." The trouble is that until the someday comes, it's costing you to carry the inventory. But with the C and D items, it's a different story and a different strategy.
"I would suggest to you that you tweak margins up on the C and D sellers, but never on the X and XX non-sellers. I'm not talking about putting high margins on items to slow down the sale. Don't hear that. I'm just saying that if you have items on your shelf, and they're selling only a few times per year or less, but you must carry them in your store, look at your margins on those items. If you've set a Final Gross Margin overall of 44%, you had better be carrying at least a 50 point margin on those slower selling items."