By Adam Yates: adam@newgatetrading.co.uk Linkedin
In times of economic uncertainty, Luxury Goods and Fashion retailers often find themselves at a crossroads, forced to make tough decisions regarding their marketing budgets due to the impact of recessions. As the UK faces the upcoming challenges of a recession, the resultant sales downturn compels many retailers to reevaluate their media expenditure, potentially leading to cutbacks that could further exacerbate the situation. Newgate Trading has a recession-proof strategy, a solution that allows advertisers to maintain their marketing exposure at minimal risk.
Amidst the economic turmoil, there exists a strategy that not only mitigates the adverse effects of the recession but also positions savvy media owners and advertisers to excel and gain market share. This strategy involves the innovative use of surplus inventory or gift cards to purchase media, thereby maximising exposure while conserving financial resources.
Newgate Trading Europe Ltd (Newgate) stands at the forefront of this revolutionary approach, acting as the bridge between advertisers and media owners to facilitate barter transactions that benefit both parties with a recession-proof strategy. By leveraging surplus inventory or gift cards as a form of payment, advertisers can unlock a myriad of advantages that traditional cash payments fail to deliver. This is particularly useful for the Luxury Goods and Fashion sector.
Contact Newgate: HERE
Recession-Proof Strategy for the Luxury Goods and Fashion Sector
Let's consider the intricacies of this strategy by examining a hypothetical scenario where a Luxury Retailer intends to invest £100,000 in advertising space within a Luxury Magazine (Either print or digital).
Traditionally Payment Mechanism: the retailer would transfer the entire sum in cash to the agency/media owner, resulting in a significant financial outlay.
Smarter Payment Mechanism: Newgate provides a facility where the retailer can optimize its expenditure while still achieving its marketing objectives. By allocating 50% of the payment in cash (£50,000) and the remaining 50% (£50,000) in the form of store vouchers or credit notes, the retailer effectively reduces its total expenditure.
The financial impact is a clear win for the retailer. the advertising will cost £50,000 plus £50,000 of gift cards. Assuming 100% are redeemed (many will become lost in the washing machine) then this will cost the retailer much less. £50,000 of inventory at retail price may have a cost price of only £20,000 bringing the real cost of the advertising to £70,000, 30% less than the traditional method.
The brilliance of this approach lies in its multifaceted benefits:
Cost Savings: By utilising surplus inventory or gift cards, advertisers can enjoy substantial cost savings, with potential savings of up to 30% compared to traditional cash payments.
Conservation of Working Capital: The strategy conserves the advertiser's working capital and improves cash flow, allowing for greater financial flexibility during challenging economic times.
Increased Sales: The issuance of store vouchers or credit notes guarantees additional sales and incentivises consumers to make purchases, thereby driving footfall and online sales for the retailer.
Potential for Incremental Sales: Beyond the value of the vouchers, there exists the possibility of generating incremental sales above the voucher value, further enhancing the return on investment.
Breakage: Unredeemed vouchers ultimately expire, resulting in additional revenue for the retailer through breakage.
Market Share: While competitors are cutting back their media exposure by 30% our retailer is maintaining their full planned exposure at 30% less cash outlay.
Confidentiality: Newgate ensures confidentiality and discretion throughout the transaction process, safeguarding the interests of both advertisers and media owners. Through signed confidentiality agreements and discreet remarketing of gift vouchers, Newgate maintains the integrity and confidentiality of each transaction, instilling trust and confidence among its clientele.
In summary, the current economic landscape presents a unique opportunity for Luxury Goods and Fashion retailers to leverage surplus inventory or gift cards as a strategic tool in their media purchasing endeavors. With Newgate's expertise and network, advertisers can negotiate favorable terms and unlock unparalleled value, propelling their brands to greater heights amidst economic uncertainty.
For more information on how Newgate Trading can assist your business in navigating these challenging times and maximising your media exposure, please contact us for a confidential discussion.
Contact Newgate: HERE
Other Industries: This mechanism will work across many different industries:
Clients have the flexibility to pay for our services using their goods, services, downtime, or surplus inventory. Here are some business examples:
Retailers: Store gift cards, products, or distressed inventory
Airlines: Unsold airline seats
Hotels: Room nights, meal and bar vouchers
Cruise lines: Unsold or otherwise empty cabins
Restaurants: Meals on what otherwise might be an empty unsold table
Movie theatres: Gift cards and popcorn
Tyre and Mechanics service businesses: Tyres and Vehicle Servicing
Freight and Couriers: Spare space in the truck or van
Sporting clubs: Match tickets, Corporate Hospitality, Advertising, Sponsorship, or Merchandise
Media Suppliers: Advertising
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