Make more of your surplus stock in the New Year
With Christmas almost a distant memory, one of the key
issues that faces both online and offline retailers in the New
Year is dealing with excess stock that is left over following
the festivities. The choice of Christmas-branded products
seems to get larger each year and varies from the staples of
Christmas pudding and advent calendars to Santa outfits for
children and Christmas monopoly.
Each year retailers face the task of managing their stock
levels and dealing with surplus stock which loses value as
soon as the festive period is over. Of course, this isn’t simply
an issue related to Christmas, but is a year-round dilemma
that applies to summer stock, Halloween products, Easter
eggs and more.
Excess stock can be a huge problem for all retailers,
ultimately damaging their bottom line. Whether you are an
online or offline retailer, the problem of dealing with excess
stock exists to varying degrees. The good news is that there
are steps that can be taken, one of which is the use of
corporate trade, which is in essence a form of barter, to
minimise the negative impact.
More from media spend
Corporate trade companies allow brands to maximise value
from their excess stock by buying these assets in return for
“trade credits”--for more than they would achieve in cash in
the open market--which the brand can spend on a range of
services from media campaigns and printing to conference
facilities and corporate hospitality. To provide an example
of how much value can be unlocked from surplus stock, we
were able to release over £91 million in value globally via
trade credits last year.
In a typical deal a retailer is paid three times more than the
stock’s “realisable” cash value in trade credits. Typically trade
credits can be used to pay for between ten and 25 percent of
the cost of an advertising campaign, highlighting the potential
gains that retailers stand to make.
Despite corporate trade being a well-established industry, not
enough retailers make the most of the opportunity to
generate extra value from their media spend. As a result,
retailers are often left having to “cut their losses” with their
surplus stock, which they could use to boost their ad spend.
The growth of corporate trade has led to more and more
media agencies working with these organisations when
planning and buying campaigns on behalf of clients and
forming partnerships with them.
According to recent figures by Nielsen, retailers spent
£998,838,485 across TV, press, radio, cinema, outdoor and
online advertising over the last twelve months. Using our
proprietary formula which calculates how much retailers can
boost their advertising spend by if they take advantage of
being paid in trade credits for underperforming or excess
stock, we worked out that retailers have potentially missed
the opportunity to boost their advertising spend by £100
million or more over the last year alone.
But what are the key factors for retailers to bear in mind
when partnering with a corporate trade organisation to make
more of your excess or unwanted stock?
Firstly, retailers should only deal with the largest, established
operators in the marketplace. It’s these that have the
financial stability that ensures they will be around in the long
term. For brands it means they can safely spend their trade
credits at their leisure without worry that the corporate trade
partner might not be around to spend it through.
The corporate trade company should have a worldwide
presence. It’s highly likely that at your agency you have
various clients who want you to implement cross-border
campaigns. A corporate trade company with operations
around the world can help generate extra value for media
spend within the countries it operates in. It’s this reach that
also provides added flexibility and value.
Ask which media agencies and also brands the business
currently works with. If they don’t work closely with the top
media agencies, across the likes of Omnicom, Havas, WPP,
for example, they are probably not well thought of or
experienced enough, so it’s worth giving them a miss.
These corporate trade organisations are also unlikely to have
strong relationships across a broad range of media owners,
which they can leverage to ensure advertisers generate
the best value from their trade credits.It’s vital that brands
only sell their stock via approved resellers to avoid seriously
damaging their brand. To this end it’s the larger and more
established corporate trade businesses that are more likely
to have the contacts to sell a brand’s excess stock onto
Ensure the corporate trade business is open and honest. To
find this out meet up with them, before making an
appointment, to see what they can offer all parties. If they
can’t deliver a deal which includes and benefits everyone
involved, move on.
In this day and age technology has progressed sufficiently
for corporate trade organisations to offer 24/7 reporting on
how trade credits are being spent. This knowledge can be
used to easily tweak trade credit spend in real time to ensure
the brand constantly generates the best results from their
campaigns. Generally it’s the larger companies that have
this technology. Always ask what reporting procedures are in
place before making an appointment.
Dean Wilson is vice president, international division, at
corporate trade company Active International.