New Wave Group AB Annual_report_2018_EN_HQ | Page 23

NWG // CORPORATE
3%
Net sales per
sales channel
Promo
Retail
97%
Sales channels
The segment's products are primarily
intended for the promo sales channel,
where the majority of sales are also found
(97%). However, the products can also be
sold in the retail sector, as many of the
products are in common. The promo sales
channel places demands on high service
level and availability. For example, a
company that orders promowear in their
company's colour to its employees or
customers, depends on the supplier being
able to deliver a full size sorting and
the right colours. For example, if New
Wave cannot deliver products in the size
medium or the end customer's corporate
colour, it will choose another supplier.
The Group's objective within promo is
to deliver 98% of its products within
24 hours.
The Nordic promowear and promo-
tional gifts market is distinguished by a
clear distribution chain: manufacturer
– wholesaler – retailer – end customer.
The distribution is not as well orga-
nised in Southern and Central Europe.
Distributors who market brands that
they do not themselves own often have
substantial influence in the market.
The North American market is more
developed and the distribution chain
resembles the Nordic market.
In Sweden, there are about 3,000
retailers of promowear and promotional
gifts, a high figure per capita compared
with the rest of Europe and the United
States. There is a wide variety of retailers,
ranging from simple sole proprietorships
to large companies with high-end
displays and travelling sales forces. Some
retailers target one of the three subdi-
visions, while others work all three.
Most are pure sales companies, but it is
also common that retailers also print,
embroider and engrave in order to have a
more complete offering.
Workwear has traditionally been
sold via specialised outlets for example
construction, industry and paint shops,
but today workwear is sold through many
other channels such as pure workwear
and protective clothing stores as well as
promo dealers. Those who sell workwear
operate together with the already esta-
blished brands or by developing their
own brands and collections. The market
for workwear for the public has also
increased, which has led to an increase
in the range of workwear at specialist
retailers that target private individuals.
Capital tied up
The capital tied up in inventories is rela-
tively high, but is a prerequisite for success
in the promo sales channel. The customer
is dependent on the supplier being able to
deliver full size sorting and in the right
colours, otherwise another supplier is
chosen. However, the risk of obsolescence
is low because a larger part of the range
is timeless basic products that there is a
need for, season after season. Many of the
products are common to both the promo
and retail channels, which offers signi-
ficant risk diversification, and means
that catalogues can also be common.
Adjustment for changed purchase prices
is made continuously as it is about imme-
diate sales and the currency risk can thus
be limited. When it comes to capital tied
up in accounts receivable, sales are made
to selected retailers and credit losses are
relatively low. In 2018, the confirmed
credit losses within Corporate amounted
to 0.09 (0.08) % of sales.
ANNUAL REPORT // 023