2010 Soccer World Cup mementos may lose up to 90% of their value

“As the World Cup approaches, South African retailers should be aware of the risks of investing in 2010-specific inventories and that some stock may lose up to 90% of their value,” cautions Andy Bryant, executive of the Chester Finance Group, providers of trade, bridging and equity finance. “Fan patriotism may not be enough to move these stocks and there are risks of ending up with unwanted items.” 

On the upside, Bryant highlights the benefits afforded by special events such as the 2010 Soccer World Cup, with retailers being able to capitalise on the excitement and loyalty of fans. “The opportunity to bring in branded mementos is a good one, and can be positive and profitable.

“However it could also present a situation in which retailers are faced with an excess of stock that will not move when the event is over, or when a particular team fails to make it through to the next round.”

Bryant advises retailers to exercise caution and avoid instances where the demand for certain mementos falls off and they are left sitting with unwanted stocks such as pins, scarves, mugs, etc. “They may then have to sell items at up to 90% off of the initial retail price, depending of what type of stock it is, simply to move them.”

Retailers should be fully aware of the risks of 2010-specific inventories and should have backup strategies they can follow should demand decline and surplus stock begin to build up. “For example, a stock item that is branded with the identity of a particular team or country may initially do well in the early stages of the World Cup. However, if that team does not make it through to a following round, demand for related items will fall away, and demand for other items can pick up as fans change the team they are supporting. A retailer should be able to take a specifically branded item, remove its branding and sell it as a more generic World Cup item – or even rebrand it differently. This ability preserves its selling price potential and items will not need to be marked down as much.”

Bryant cautions retailers to be realistic about their inventories and not expect them to become collectors’ items. “It has been well proven that the only items that remain in high demand and become collectables are the exceptional mementos, such as the picture of the winning kick in the 1995 Rugby World Cup.”

Bryant says the same advice would apply to importers and wholesalers who in turn supply the retailers with 2010 items such as clothing, soft drinks or even mobile phones with televisions. “They should ensure that goods are sourced and imported, based on firm and irrevocable purchase orders.  Also, they should never sell on a sale or return basis as this would allow retailers to return unsold product to them.”

Ensuring optimal stock levels will be challenging and Bryant says buyers should make plans for replenishing items in case demand is exceptionally strong, but at the same time must avoid over-ordering. “Extremely beneficial would be to analyse trends in previous World Cups in order to identify pitfalls or product-specific issues that arose. Other recommendations are to ensure that customers are reputable, or that payment is guaranteed. Consideration should be given to insuring the resultant debtors’ book against payment default. Orders should always be received and in turn made on time, as well as correctly packaged according to customer requirements.”

Bryant’s final advice is that the quality of goods and presentation of the approved logo is in terms of both the customer’s and FIFA’s strict requirements.