Is there value in corporate trade agreements?

14 Oct 2011

Q:I assumed that entering into corporate trade agreements was a last resort for struggling businesses, but is there value in it for retailers and if so, what are the key considerations?

A: No matter how good your planning is, the risk of unforeseen circumstances – or simply tough trading conditions – affecting your sales is always a real threat. Yet despite corporate trade being a well established and growing industry, too few retail and brand professionals make the most of the opportunity it presents to generate extra value from their unsold assets. As a result, businesses are often left having to ‘cut their losses’ with their surplus stock, exposing their organisations to financial loss as well as having to contend with what to actually do with the goods.

Dean Wilson, managing director of global independent corporate trading company Active International, explains how corporate trading might help. “We buy retailers’ distressed stock in exchange for media trade credits and sometimes, cash. The value our clients receive for this is up to three times the amount that the stock would be worth on the open market. They can use the trade credits to bolster their marketing and media activity – to buy print advertising, conference space, pay for events, corporate hospitality, TV ads and so on.”

He adds: “Reputable corporate trading companies only sell to approved resellers.” Wilson’s parting advice though, is to ensure that you work with a company that is financially sound. “It may seem obvious, but longevity is key here. You are unlikely to want to use your trade credits all at once, so you need your corporate trading company to be around for the long term.”

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