New Wave Group AB Annual_report_2018_EN_HQ | Page 33

NWG // GIFTS & HOME FURNISHINGS
Sales channels
Most of the segment's sales are in the sales
channel retail (87 %). Swedish retail has
for some time undergone and undergoes
a major restructuring in which the
consumer's interest in the traditional
glass and porcelain trade is diminishing
in favor of design and interior stores. The
development of e-commerce. is another
strategically important part where the
customer's changed trading patterns
require a completely different accessi-
bility than before. Brands such as Kosta
Boda, Orrefors and Sagaform have an
established position in the retail sector
and have the opportunity to make sales
both in the traditional way and through
e-commerce. A growing part of the
segment is Destination Kosta, where all
sales belong to the retail sales channel.
Part of the Kosta Boda, Orrefors
and Sagaform brands are sold to the
promo market, where the products are
used as everything from simple gifts to
exclusive gifts for jubilee or memorable
occasions. Kosta Boda and Orrefors
retain their position as interesting
brands on occasions when you want to
show appreciation with objects of more
high-quality character. Sagaform's
products are in demand as Christmas
and summer gifts for employees and
customers. The sales channel promo
places demands on high service level and
availability. For example, a company that
orders Christmas gifts for its employees
or customers depends on the supplier
being able to deliver on time. If New
Wave fails to do this, then the customer
will choose another supplier. The Group's
objective within promo is to deliver 98 %
of its products within 24 hours.
Capital tied up
Production for Orrefors and Kosta Boda
takes place throughout the year, while
sales mainly take place during the second
half of the year. Capital tied up is thus
greatest during the first part of the year.
Most of the production is classic and great-
selling product series such as Château,
Intermezzo, Line, Mine and others,
which in many cases has a product cycle
of more than 20 years, which limits the
risk of obsolescence. For the part that is
not self-produced, most of the purchases
are made against stock for resale to the
customer. It normally requires a higher
capital tied up in inventories for promo,
as this is a prerequisite for success within
this sales channel. However, the risk of
obsolescence is low, as a larger part of
this range is timeless basic products
where there is a demand season after
season. Most of the products are also
common to the sales channels promo
and retail, which contributes to a risk
spread. Price adjustments for changed
purchasing prices are made continuously
and the currency risk can thus be limited.
Sales are made to selected retailers
and credit losses are low. However, there
is a higher concentration to a fewer
number of retail customers compared
to the promo market. In 2018, the
confirmed credit losses in the operating
segment amounted to 0.31 (0.28) % of
sales.
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