Managing Inventory During a Pandemic:
5 Things Retailers Can Do
COVID-19 hit the US just as merchants were unveiling their spring and summer collections, filling apparel stores with cute ruffled dresses and colorful cotton shorts and home stores with new lines of products for entertaining family and friends.
Now, brands and retailers who had been looking forward to a few weeks of full-price sales instead find themselves dealing with shuttered stores and unprecedented levels of surplus inventory. While online sales have picked up significantly for many merchants, the gains don’t come close to replacing commerce lost from closed stores and the one-two punch of social distancing and a damaged economy. Retailers are quickly realizing they need to take extraordinary measures to handle this season’s inventory.
Here are 5 ways merchants are dealing with inventory affected by COVID-19:
1. Flash sales and other aggressive markdowns
FitForCommerce is seeing a wide range of tactics, including flash sales, more frequent buy-one-get-one promotions, and sitewide discounts of 25% or more. Brooks Brothers, MatchesFashion and Crate and Barrel are currently promoting targeted sales of up to 40% off seasonal merchandise.
Pro tip on flash sales: Live Webinar 5/14
Don’t miss the FitForCommerce webinar with our Sr. Consultant, Victoria Markley on “How Flash Sales Can Help Retailers Quickly Move Inventory and Boost Cash Flow”, sponsored by Scalefast. [Sign up here]
What we’re hearing:
“We are going to be running more sales and sales with deeper discounts, including flash sales,” says a marketing executive for an apparel chain that has temporarily closed its stores and shifted its focus to ecommerce. “Our goal is to sell as much of this season’s merchandise as quickly as we can.”
2. Cancelled or amended orders
Many merchants have cancelled orders where they can for spring, summer and some fall merchandise, and others are asking suppliers for more generous returns policies. But a word of caution: Gap Inc. and other large chains, including H&M, Marks & Spencer and Target have faced negative publicity for leaving (or trying to leave) suppliers in the lurch.
3. Furloughed merchandise
It’s not only store associates who are being temporarily sidelined. Merchants are figuring out which products they can “pack and hold” until next year, including evergreen items like khakis and solid-color T-shirts, jewelry, tabletop items and giftware.
4. Sales to the off-price sector and liquidators
This standard tactic is being put into play much earlier in the season than usual. But the channel is feeling pressure as goods flood the market and as some of the biggest off-price players, including TJ Maxx and Marshalls, have temporarily closed both brick-and-mortar and online operations, unfortunately.
5. Turning closed stores into distribution centers for ecommerce
With many warehouses struggling to keep pace with increased demand as forklift operators and shipping department personnel call in sick or jump to higher-wage jobs offered by the competition, brands are reopening or using some stores as distribution centers. Curbside pick-up is a small dent on inventory use, but better movement will come from online orders.
“It’s as much of a win-win one can have in this situation because you can offer hours to a few employees in those stores, and get product to the consumer faster,” says Bernardine Wu, CEO at FitForCommerce. “Just make sure to have solid plans in place for frequent sanitization and required social distancing in the workplace.”
FitForCommerce is currently advising clients on the best strategies for spring, summer and fall inventory, merchandising and digital leverage. To schedule an exploratory call, contact us.