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What is in a clearance strategy?

Clearance can be a scary concept for retailers but pre-determining your expectations for return on value can reduce the risk of false starts.

Striking the right balance between stock and consumer demand is critical. And for marketers, the task of juggling two seemingly contradictory goals: ensuring unlimited stock and managing cash flow is challenging.

Too often retailers are burdened with unused, out of season or under-performing assets. This could be excess inventory to capital equipment which impairs the balance sheet. Unproductively, excess inventory is often either sold at a discount or simply left stored - taking up valuable space, depreciating in value and costing the business money. Corporate trade offers a solution that will earn back the value of those assets on your balance sheet by trading them into media.

Our clearance model that focuses on restoring value, allowing businesses to realise excess stock by trading it for its true value. Businesses can partner with Active as an ongoing strategic plan to drive profitable outcomes or create scope for media spend – a clever strategy for new product launch support

Though of course, the concept of clearance or remarketing can be complicated and sometimes scary for retailers.

Retailers can be reluctant to opt-into this solution worrying about the remarketing process of their excess stock and realisation of its value. Yet, just as successful retailers understand the value and importance of engaging in extensive and methodical due diligence before appointing a new distributor, they too need to exercise care in nominating the right business.

Pre determining expectations including the return on stock value, can minimise risks and prevent retailers from setting aside resources & valuable time on a clearance option.

Making this a success in large business

Here is an example of how a client’s due-diligence and negotiation process prior to the transaction was key to their success.

We were approached by a major retailer / supplier group on a specific inventory of high value Manuka honey following a decision to not sell the product via regular channels.

Even though there were no time pressures to move the stock quickly, given the size of the inventory the main business concern was that the stock was taking up valuable warehouse space. Being the first time that the retailer had worked with a clearance service, they were keen to set strict parameters around the process as well as a timeline on the return.  

In this case the client wanted the ability to test Active’s remarketing model and gauge their capabilities in the media marketplace and delivering back the value of the stock before committing to a long-term partnership. Prior to the execution the Active team worked closely with the client to understand the business needs and together designed a tailored solution to deliver what the client required to take the next steps.

It was essential for us to establish the needs of the client including remarketing restrictions, timeframes and approval process, value return within a set period with a financial payment plan and process so that discussions could be had on realistic deliverables and commitments from both sides.

Ultimately, the success of clearance and remarketing activities require for retailers to review their inventory investment and ensure their cash value is being realised. Retailers need to be meticulous in their search for the right clearance partnership.

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