November 19, 2018
Christmas for retailers unwrapped
Published in Retail World magazine
Year after year, marketers spend more in November than any other month; and the retail hype sees Christmas sales forecasts soar! Yet while Aussie retailers anticipate demand in a bid to avoid any problematic shortfalls in stock ahead of the silly season, come Christmas Day, any excess inventory is just as big a problem.
Retailers are looking to reduce the heavy overheads that burdened December, free up storage in store & in warehouse for new product lines and sell their surplus inventory. Massively reduced sale prices starting on Boxing Day and continuing for the rest of January do not move stock fast enough nor do they do recover the full wholesale value of the products. Also, liquidation is often considered as the answer. But as the traditional sales period peaks, inventory realisation plummets and retailers are left with a fraction of the anticipated margin. Instead, it is critical that retailers understand the true value of excess merchandise and implement an effective process to maximise recovery value without taking away the focus on the New Year sales cycle.
So what does a winning strategy look like this Christmas?
Corporate Trade –offered by companies such as global vendors Active International– is a way to transform excess stock into sales opportunities across the 17 countries they operate in (including the booming Chinese market) without liquidating the product.
“Of course retailers don’t want to be perceived as to have huge volumes of unwanted stock after a heavy period of November and December promotion. We offer alternative distribution platforms for our clients – such as trading partners or private networks. We help our retailers sell excess inventory without devaluing their business, or the product” explains Selina Martin, Head of Commercial, Active International Australia. “We always seek to create extra value from every transaction to maximise the balance sheet recovery in the post-Christmas period, while protecting brand reputation.”
Corporate Trade allows retailers who spend in excess of $500k per annum on marketing to use the sale of excess goods, services or capital equipment to part-pay for above-the-line advertising. “We offer retailers an opportunity to build a new sales cycle that responds to their current seasonal demands while too addressing their excess inventory challenges to make that possible” Martin continues.
A good example of how this works is a major fashion label who found themselves tied up with seasonal capital that they couldn’t move. As a brick and mortar retailer in a fashion district they could not afford the risk of poor stock and heavy foot fare over the Christmas period. Come Christmas Day, armed with excess inventory and the start of sales season, they partnered with Active to off load out-of-fashion items in exchange for media budget.
The clothes were sold to a specialist clothing remarketer, where they were de-branded and sold on via independent outlets. The result? Instead of adding discounted and last minute cash to their bottom line, the label received the full value of the stock in the form of media credit – all facilitated through Active’s media exchange network.
Ultimately, Corporate Trade offers marketers a way to leverage already sunk costs and pull them into alignment with wider commercial objectives.
Excess stock is not unique to brick and mortar retailers come silly season. Another success story is a renowned global hotel chain who wanted to better promote special offers to increase last minute occupancy during the peak travel period. Stuck with excess inventory they partnered with Active. Similar to the fashion retailer, the hospitality supplier provided Active access to unbooked rooms in exchange for media budget.
Instead of adding discounted and last minute cash to their bottom line, the hotel received additional media spend which guaranteed the ROI the client wanted. The hotel chain saw an impressive 20% volume increase in first-time phone inquiries.
From a business perspective, remarketing offers retailers the ability to reinvest the value of excess stock almost instantly. It offers a safe-proof means to retailers to outsmart the silly season hype and kick starting their New Year sales cycle, Martin concluded.
Whatever the retail sector, Corporate Trade promises clients to solve excess stock challenges and boost their media budget all in one go.