Capture more Christmas sales with the right financing
31/Jul/2014 • International Trade•
Online migration and demands for better service over discounts mean that retailers who can minimise stockouts stand to make better profits. Can trade finance help?
As the economy continues to grow and consumer spending drifts upwards, we can expect to see sales figures for consumer-facing products reaching new heights this Christmas. Trends towards online, multi-channel shopping and last minute spending mean that holding stock is king: but are British businesses armed with the right kind of trade finance to capitalise on it?
Online trading boomed in the winter of 2013. A BRC survey revealed that there was a 19.2% growth in Internet purchases compared to the previous year – the fastest growth in four years. Traditional retail grew, but only by 0.4%. This reflects the wider migration to online purchasing, but it also represents two other factors: firstly, successful retailers are pursuing a streamlined multi-channel strategy that offers better value for customers, and secondly, those customers are in turn happy to trade the high street experience for better value.
Consumers are also spending in a more last-minute way, according to Helen Dickinson, director general of the BRC. “The last minute rush arrived as expected, giving a major boost to sales in the final few days before Christmas after a fairly flat showing mid-month.”
This Christmas, the winners among retailers will be those who have availability of stock and speed of delivery, both will make a big difference to the success of many retailers at the busiest time of the year. But what holds them back?
Stocking right for the sales season has its own challenges beyond just choosing the right products, and managing the lead time to get the product in time. Supplier terms, especially for consumer items, tend to favour upfront payment which causes working capital issues. The industries that appear to be most affected are consumer facing: household items, toys and electronics.
Trade finance that offers a reliable line of credit for up to 120 days can ease this working capital issue. By allowing them to increase inventory at this time of year, and thereby improving delivery and service into the bargain, trade finance is able to make the most of Christmas – and its potential for profit.
If you think your business could benefit from additional cash flow then find out more about Ebury Trade Finance here.