October 22, 2018
Managing inventory levels pre-Christmas
By Cameron Swan, Group Managing Director, Active International
Published by Retail World magazine
Believe it or not we’re all already preparing for the silly season. High sales expectations accompanied by the standard market challenges every retailer faces has stores ready to be filled with new products and warehouses ready to be overflowing.
Believe it or not we’re all already preparing for the silly season. High sales expectations accompanied by the standard market challenges every retailer faces has stores ready to be filled with new products and warehouses ready to be overflowing. The retail hype begins with soaring sales forecasts, sometimes with anticipation that the Christmas period has the potential to improve the financial results of a slow or flat year. But is there more hope than hype?
Markdowns can impact new product sales, and liquidating will impact returns - is there another approach worth considering?
With either no time to mark down inventory in store or offloading product at below cost, retailers are desperately seeking better and more immediate value. Liquidation is often considered as the answer. This results in selling stock off quickly to generate some immediate cash however it is often for less money than original cost. Even if you can liquidate without experiencing a loss, this approach may be slow and therefore not solving the problem of having warehouses packed with unsold or dated stock. Looking at taking a loss on revenue and the timeframe in moving the stock are both downfalls of this model.
Whether it’d be excess or unsold stock or a wholesale clearance from the warehouse, there are alternative ways to move stock achieving a faster and more financially satisfying clearance method. Finding the right distribution clearance platform can be proven a better option for retailers.
Corporate Trade – the golden gate to new distribution clearance platforms
“Corporate Trade offers alternative distribution platforms for our clients– such as trading partners or private networks. We are able to not only help retailers move stock and generate some immediate cash, but also to allow businesses to free up warehouse space quickly and easily in order to make room for new products.” commented Cameron Swan, Managing Director, Active International Australia.
It sounds like a win-win but maybe that’s because it is.
Fundamentally in any transaction of Corporate Trade, excess inventory is purchased with cash or a Trade Credit. Payment is typically equal to the wholesale/acquisition cost of the inventory). The retailer can then use their Trade Credit to part fund their media, print, travel and conferencing plus many other services that are usually reconciled with 100% cash.
Where does the excess stock go?
It is not uncommon for retailers to feel uneasy with remarketing activity and worry about where their products would ultimately end up.
“The distribution we can offer doesn’t mean that the retailer loses control of where their product is sold. Actually the opposite, we ensure our clients have full control of the remarketing process, approve the distribution channel and they are informed across the transaction. Every product is sold subject to client approval and sign off being part of each step of the process.
“Given we are a global network operating in 16 countries, international sales are an opportunity for many clients, this paired with our local market contacts and partners in remarketing, Active can provide a solution which will maximize the value but minimize time and focus spent on finding a solution” Mr Swan explained.
The calm after the storm
Similarly, overstock or unsold stock post-Christmas could lead to the same problem. The obvious solution is to mark down inventory in store sometimes multiple times, week after week. Piles of excess stock are sitting on the shelves and in warehouses.
Once again, the good news is that retailers can access new distribution clearance platforms to sell off the remaining stock at close to full price and watch their revenue budgets turning from red to black once more.
Active International has been in Australia for over 22 years and has witnessed how retailers can successfully manage excess inventory and turn their biggest nightmare into revenue.
“Having worked at Active International for over seven years I saw Corporate Trade mature in the Australian Market not only as a valuable proposition for any company, but also as a smart way of doing business today. In the current climate, clients are starting to recognise more and more the significant value Corporate Trade offers to their business and we have witnessed their growth” Swan comments.