For many people, the holidays were a lackluster string of events that got absorbed into all of the other mediocre days of the past crummy year. The lack of holiday cheer -- a by-product of the COVID-19 worldwide pandemic-- had fewer people out and about shopping. Yet, the holidays came and went, and another shopping opportunity has passed, leaving lukewarm results with lots and lots of leftover inventory.
Proxima 360, a management consulting company, understands the unique challenges last year brought to retailers. They work with some of the nation's top brands to meet their operational and technical needs, offering solutions to their problems. And, this year, they are providing some ideas to help retailers move that mountain of unsold merchandise and move on from the holidays.
In October, Proxima 360 predicted retailers, both brick and mortar and eCommerce, would offer month-long Black Friday promotions as a sales gimmick to boost sales and avoid an inventory surplus. "Given the ongoing pandemic and the strain it placed on inventory, shipping and sales, we are predicting that retailers, both eCommerce and brick and mortar, will soon announce a month-long Black Friday promotion," said Anil Varghese, CEO of Proxima 360. And not long after, many chain stores with enormous amounts of inventory were advertising this retail scheme. However, even this valiant effort left many retailers with an abundance of stock they now have to store or put-on clearance. Proxima 360 has a better idea.
Retailers have certainly taken a hit in 2020, and many relying on holiday sales to 'save the day' have been left disappointed. However, Carlos Diaz, director of business development for Proxima 360, suggests donating excessive inventory to nonprofits like Gifting Brands. Gifting Brands engages in sustainable inventory practices that help companies solve their inventory surplus problems while raising money to make a difference in the lives of women, children, and families. Founded by retail veteran Jeannie Barsam, the company offers retailers a solution to liquidate high-quality excess or out-of-season inventory, while giving consumers a unique shopping experience with 100% of profits being distributed to both local and national nonprofits like A Better Chance, Charity Water, and The Family Place.
Gifting Brands offers a new online shopping experience Diaz adds that shelf space in a brick and mortar is "precious real estate," and too much clearance inventory detracts from the fresh merchandise retailers need to get out and sell. By donating the leftover merchandise, businesses can free up that shelf space and get a tax deduction.
The IRS code related to these deductions states that regular C corporations can deduct the cost of the inventory donated, plus have the difference between cost and fair market value. In some cases, deductions can end up reaping twice the price.Scorporations, partnerships, LLCs, and sole proprietorships qualify for a straight cost deduction.
Everything about 2020 was a challenge for retailers. The usual significant shopping opportunities such as 'back to school' shopping and the holidays have left retailers with excessive amounts of product, and they will have to get creative when it comes to getting rid of it. Proxima 360 says donating excess inventory has another benefit, not just the tax deduction.
Some retailers might choose to donate their surplus to a charity rather than a nonprofit resale company like Gifting Brands. Either way, your business will get a tax deduction and might also gain some positive publicity. Companies that donate their excess product say they feel good about where the merchandise is going and how it will be used. Additionally, their customers like and respect the fact that they are doing their part to help out in this world. They are keeping items out of a landfill and helping a charitable organization. Gifting Brands is offering consumers an easy way to be socially responsible in 2021. In fact, once a product is placed on Gifting Brands' website, consumers have the opportunity to purchase contemporary & luxury brands at a discounted price and select the charity that receives the proceeds.
This challenging year may be over, but the effects will linger long into 2021. Therefore, companies like Proxima 360 will be around to help businesses navigate their unique challenges and operational issues, including leftover merchandise and much, much more.