Fashion brands around the world are facing the same difficulty in dealing with all the unsold clothes.
During the COVID-19 pandemic, many shops were shut down and retailers have cancelled orders to protect themselves financially. Take an example from the fashion industry, clothing sales have dropped 66% in the US since March.
Many retailers tend to over-order clothes on seasonal buys, expecting to sell for only half price. The rest of the unsold clothes are then discounted in end-of-season sales to attract low budget customers.
Many brands decided to over-order as it is cheaper to double volumes with a factory and deal with the surplus later. This is a common habit for both mass-market and luxury brands. In fact, this has resulted in a massive build-up especially during the breakout of COVID-19. Take an example, Swedish fast-fashion purveyor H&M is sitting on £3.4 billion (S$6.2 billion) in unsold merchandise as of late April.
Some of the unsold stock would be destined for landfill or ordinarily burnt to protect a brand’s image and price integrity. However, the increased scrutiny led two largest conglomerates, LVMH and Kering to announce the banning of such bonfires by 2023. Designers need to get rid of the unsold clothes by using other workable ways.
How Burberry deal with it?
Burberry, a British luxury label is so far the only brand that announced a strategy for its SS20 overstock. The unsold stock will be discounted at outlets and in staff sales, or else recycled or donated to charities.
Burberry has revealed that they have burnt £28.6 million of unsold merchandise in its 2018 annual report. After a massive wave of negative press, it announced it decided to ban the unethical practice altogether.
Strategies of small brands
While prestigious brands can carry stocks to their cut-price shops, small brands can only solve it on their own. The first line of attack was an early flash clothing sale. Besides, another intelligent way of discounting without reducing from the full-price merchandise is to hold a sale edit for resale.
Nikole DeSantis, commercial director at Shrimps said that online sales are still ‘logistically complicated’. This is because customers may request for returns from online sample sales. However, she mentioned that cooperating with third parties with their database is a practical way to reach a wider range of customers. This might better help in dealing with the overproduction of clothes.
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Prepared by: Pui Leng