October 22, 2018
When summer lets you down
Published in Retail World magazine
With summer only weeks away, many seasonal skewed brands are looking forward to finally launching their new product lines and flavours targeted to the festive season and warmer days. New lines are accompanied by and often have set up optimistic sales forecasts which rather look like sales ‘wish-casts’.
For beverage brands in particular, summer in Australia represents the longest, the busiest and the hottest season of the year. It is time for brands big or small to get really competitive, investing large in marketing campaigns to promote their new summer flavours with bold taglines and bright colour packaging, inviting consumers to enjoy with the aim to accelerate sales and achieve forecasted demand.
New product hype results in strong sales forecasts in anticipation for a big sales success. However, it is quite common for brands’ sales forecasts to fall short. Summer brings a heighten sales activity, is it, however, just a seasonal buildup that could let you down? Let’s face it, not all marketing campaigns work, not all product lines perform well and simply it is not often that sales expectations meet consumer demand. Your brand’s new flavour could be one of 10-15 launches that year, giving consumers a vast selection to choose from and resulting in sales forecasts going wrong.
It is all in the life-cycle
Timing means everything. Especially in summer, we often see the life-cycle of beverage product lines to be strong but short. From launch through to sales growth and maturity to the start of sales declining happens so fast, it is impossible to see the full product range make it to the counter or online cart before summer ends.
Once these products have reached the end of their life-cycle unsold, retailers want them quickly removed from store shelves and clients from their warehouses as they are now in off season and have become obsolete or excess stock.
So what happens next?
When things do go wrong, when the new product line is slow moving and is piling up in warehouses, beverage brands and their CEO’s start to desperately seeking for strategies that will let them extract as much value as possible as well as solutions that can rabidly get rid of the unwanted stock minimizing the losses.
Seasonal sales or sale racks are no longer an option as the excess stock will only further burden their bottom line at the end of the year.
“In such situations, there are ways to recover the depreciated value and turn the excess stock into sales. The opportunity is not lost. At Active, we offer an extensive remarketing network across the globe including China and South East Asian markets. Our local and global distribution for inventory is a powerful benefit to brands exploring ways to liquidate and create value for their brand” said Cameron Swan, Managing Director, at Active International Australia.
“Through the right channels, the opportunity exists for brands to receive an accelerated cash return and improve the sell-through of any inventory and reduce any operational costs that come with managing clearance programs, achieve a positive impact to their business and build a new sales cycle that responds to their current seasonal demand and gives a second life to their unsold product. It is essential to the bottom line that retailers understand the true value of their excess stock and they are in a position to implement an effective process to maximise recovery” he continued.
Restoring value to excess stock
A clearance strategy allows retailers to seek a second chance, a second round of sales, remarketing stock through a market sale in a new retail environment.
The challenge for brands however, is when clearing the unwanted stock in a fast and efficient way to also keep in line with the brand restrictions, brand protection and brand safety measures provided by the retailer. Not all clearance companies can deliver a safe remarketing strategy that ensures the brand integrity while moving stock fast and recovering the highest value out of the obsolete stock.
Selina Martin, Head of Commercial at Active International explains: “Through our vast experience working with brands with obsolete stock to recover the value lost, the more we see that there is no one-type-fits-all clearance solution. We create a customised solution tailored to our client’s needs and together we identify areas of their procurement which best fits their business requirements, to be able to deliver additional value helping recover the highest possible value of their wholesale price.
“When the right strategies and measures are in place, we see more and more brands realise the full value for their delisted or off-season product which otherwise this would have been a cash loss for their business” Selina added.
Summer sales life-cycle reflects on many brands beyond the beverage category, extending from fashion apparel to FMCG, liquor brands, home improvement retail to furniture and homewares, healthcare, luxury goods and cosmetics.
When remarketing and clearance strategies are delivered on time and the right way by a professional & experienced team, they are often proven very successful and can deliver real results recovering the majority of the lost value of the obsolete stock.
The summer season will always be promising for brands as they continue to strive to meet consumer demand, and sales forecasts will always be running the risk of being too optimistic and falling short which makes remarketing and clearance solutions an integral part of any business sales strategy.