Twas the week after Black Friday, when all through the land
Managers weren’t sleeping, for there was trouble at hand
The sweaters remained, stacked neatly in rows
Gift boxes, all empty, lay patiently with bows
Shoppers came and went, drastic sales were advertised
But it mattered not at all, the CFO would be advised.
It’s a tale we haven’t heard for many winters – according to National Retail Federation, for the first time in at least seven years, Thanksgiving weekend sales were down year-over-year. And, the disappointment isn’t limited to Thanksgiving. “The holiday season has been marginal to just OK,” said Joel Bines, managing director and co-head of the retail practice at AlixPartners. “Retailers are doing anything they can to get rid of merchandise.”
That extra inventory, combined with a less than encouraging retail environment (a slow buying season, a shorter shopping season overall, and an early Hanukkah), likely translates to massive overstock as retailers close out 2013 and begin to look towards the spring shopping season. As Marshal Cohen, chief industry analyst for NPD Group, noted in the Wall Street Journal, “when the most common sizes of popular items don’t sell out, that’s a problem.”
Excess inventory is unfortunately not just a single problem for retailers, but a compound one. Not only does excess inventory mean that sales were underwhelming but it also means that merchandise is taking up valuable floor or warehouse space – space that could be used for new merchandise.
To solve these problems retailers frequently fall back on reliable, but fiscally unimpressive, tactics such as discounts or liquidation.
Corporate trade helps solve these problems. Corporate trade firms are able to take the inventory off their customers’ hands at a premium to market value. In exchange for receiving a higher price, customers agree to purchase services through the corporate trade company (typically planned expenses such as media, retail marketing, travel & events, and freight & logistics).
‘Tis the season to be merry. Active International wishes you a happy and prosperous New Year. Talk to us today to learn more about how we can help you prosper.