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COVID-19

What can clothing retailers do with all that excess inventory?

Marielle Segarra Aug 24, 2020
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Joe Raedle/Getty Images
COVID-19

What can clothing retailers do with all that excess inventory?

Marielle Segarra Aug 24, 2020
Heard on:
Joe Raedle/Getty Images
HTML EMBED:
COPY

Because of COVID-19, clothing sales are way down, leaving retailers with a glut of items that didn’t sell in spring and summer. 

What to do about all the inventory? There are not a lot of good options. Retailers might try to pass the problem off to somebody else — meaning, return the clothes to their suppliers. 

Lauren Beitelspacher, who teaches marketing at Babson College, said department stores, for instance, will often negotiate terms about excess inventory in their contracts with suppliers. These contracts mandate that you will give me advertising money, you will allow me to discount it or you’ll take the inventory back, she said.

Another option: Hold onto the clothes.

“It’s called the pack-and-hold strategy. They just pack it away and hold it for next year. We don’t see that very often,” she said. That’s because it’s expensive to store all this stuff, and fashion trends are constantly changing. “But a lot of retailers are planning on doing that now.”

A third option: Sell the clothes to an off-price retailer like T.J. Maxx or to shoppers by offering steep discounts. The Loft recently advertised shorts for $12. 

They’re probably losing money on that short,” said Shelley Kohan, who teaches at the Fashion Institute of Technology. But she said they might lose even more delivering the item to an off-price retailer. Logistics can get expensive.

The problem with steep discounts, however: The more you do it, the more customers expect them.

One last approach we’ve seen retailers use in the past is to destroy their clothes. In 2018, Burberry said it burned tens of millions of dollars of unsold merchandise. It later promised not to do it again.

Burning clothes is a bad look, said Bill Lewis of AlixPartners. “Given the economic hardships that are out there right now, retailers aren’t going to want to be known for doing that,” he said.  

He said they’d be better off donating the clothes.

COVID-19 Economy FAQs

So what’s up with “Zoom fatigue”?

It’s a real thing. The science backs it up — there’s new research from Stanford University. So why is it that the technology can be so draining? Jeremy Bailenson with Stanford’s Virtual Human Interaction Lab puts it this way: “It’s like being in an elevator where everyone in the elevator stopped and looked right at us for the entire elevator ride at close-up.” Bailenson said turning off self-view and shrinking down the video window can make interactions feel more natural and less emotionally taxing.

How are Americans spending their money these days?

Economists are predicting that pent-up demand for certain goods and services is going to burst out all over as more people get vaccinated. A lot of people had to drastically change their spending in the pandemic because they lost jobs or had their hours cut. But at the same time, most consumers “are still feeling secure or optimistic about their finances,” according to Candace Corlett, president of WSL Strategic Retail, which regularly surveys shoppers. A lot of people enjoy browsing in stores, especially after months of forced online shopping. And another area expecting a post-pandemic boost: travel.

What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?

Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”

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