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By Sonya Dowsett and Lisa Baertlein
MADRID/LOS ANGELES, June 2 (Reuters) - Forget fast or slow
fashion, now it's ground to a halt.
A mountain of apparel stock has been piling up in stores,
distribution centers, warehouses and even shipping containers
during months of COVID-19 lockdowns. As retailers reopen around
the world, they have to work out how to get rid of it.
Their main options? Keep it in storage, hold a sale, offload
it to "off-price" retailers like TJ Maxx which sell branded
goods at deep discounts, or move it to online resale sites.
None are ideal, and all are damage-limitation.
Real estate company Knight Frank told Reuters it had fielded
inquiries for excess stock for over 6 million square
feet(557,500 square meters) of short-term let warehouse space in
Britain since the pandemic took hold there in March.
Yet storage is only a realistic option for evergreen
"basics" that are not tied to one particular year and could be
sold at a later date should consumer demand bounce back - items
like underwear, t-shirts, chinos and classic sneaker styles.
Apparel chains including British high-street retailer Next
and German sportswear brand Adidas said they
had stashed away unsold basics, with the aim to offer them to
shoppers next year instead.
But stowing away piles of inventory is risky.
"This is not like wine that gets better with age. Your
inventory gets worse," said Emanuel Chirico, chief executive of
PVH Corp, which owns Calvin Klein and Tommy Hilfiger, on a
recent earnings call.
In the United States, clothing sales fell 89% in April from
the same month in 2019, while in Britain clothing sales sank by
50% compared with an already-squeezed March.
Retailers hope that easing of lockdown measures will see
shoppers return to stores, eager to unleash pent-up demand. But
there is no guarantee that sales will rebound any time soon.
DUMPING INVENTORY
Many stores are likely to pursue a combination of holding
sales as well selling stock to off-price retailers. The mix will
depend on consumer appetite, how much merchandise stores have to
shift and how fast they must free up space for new collections.
In-store discounts are usually a better option as dumping
inventory in bulk to off-price players returns just pennies on
the dollar for the retailers.
Off-price retail group TJX, which started opening
its TJ Maxx and Marshalls stores this month, said in May there
was "incredible availability" of stock on the market.
UK-based Parker Lane Group, which helps companies manage
excess stock and advises on selling off-price, is processing at
least double its usual volume of up to 1.5 million items of
apparel per month, founder Raffy Kassardjian told Reuters.
"Some of our customers are waiting for retail to open up to
gauge their performance before they make a commitment on how
much stock they want to write off," he said, referring to both
selling at discount in-store and offloading to off-price.
'MOST INSANE SALES'
Potentially more lucrative is moving merchandise to online
re-sale marketplaces that take a commission on sales, although
that option is largely only open for high-end brands.
California-based luxury re-sale marketplace Tradesy opened a
new business unit in April to deal with the jump in brands
looking to sell stock they were stuck with after department
stores canceled wholesale orders, said CEO Tracy DiNunzio.
"A number of these brands are set to go live in the next
couple of months," she said, adding some may set up their own
landing page on Tradesy while others would sell more discreetly.
Apparel was still the number-one category for spending
cutbacks among U.S. consumers surveyed by Coresight Research on
May 20. Non-essential retailers are set to reopen on June 8 in
New York City and June 15 in Britain.
Even some shoppers are plotting a quick profit using re-sale
websites.
"We're going to see the most insane sales," said Melissa
McAvoy, founder of events company Luxury Experience & Co, who
lives in the celebrity-studded Los Angeles suburb of Calabasas.
The 43-year-old said she planned to snap up merchandise at a
discount, to then resell it at a higher price online at a site
such as California-based Poshmark, which also makes money by
taking a commission on sales.
"I'm going to get a tonne of stuff and either wear it once
or put it on Poshmark," she said.
(Additional reporting by Melissa Fares in New York and James
Davey in London; Editing by Pravin Char)
