With non-essential retail stores just weeks away from reopening their doors, many retailers now have to contend with the excess out-of-season stock that has piled up in both stores and warehouses.

Fashion retailers are estimated to be facing up to £15bn in stock write-offs as a result of the coronavirus lockdownThe March to June period accounts for a third of the UK’s £55bn-a-year fashion sales, putting £18bn of revenue at risk. Retail Economics and Alvarez & Marsal estimate that non-food sales have plunged 70% during the pandemic.

To get rid of dated stock, prices are predicted to be slashed. Currently Topshop, Miss Selfridge, Asos, John Lewis, New Look and Debenhams are offering discounts of up to 50% online.

Harrods-front

Harrods is opening an outlet in Westfield London to help with its Sale

Harrods is even opening a new store in Westfield London specifically to handle its summer Sale. The store, called Harrods Outlet, is set to open in early July and is designed to ease pressure on its iconic Knightsbridge store to ensure social distancing is not compromised.

Analysts predict that blanket discounts could last until the end of the year, but there are alternatives to huge Sales to shift excess stock. Retail Week looks at some of the more inventive ways fashion retailers are offloading old clothes.

Mystery boxes

After realising that 135,000 tonnes of stock would be bound for landfill as the UK high street cancelled their spring/summer 2020 orders, Edinburgh-based start-up Mallzee launched Lost Stock boxes.

Each fashion box is sold at £35, but contains more than £70 worth of clothing that comes directly from Bangladeshi factories. Customers are able to specify their size and taste in terms of fit, colour and pattern, so the box is more tailored to their personal style, but the actual garments they receive are a mystery.

Retailers could replicate this idea directly from their own warehouses, offering a certain number of items at a discounted rate, but leaving the actual content of the boxes as a surprise when its reaches the buyer’s doorstep.

Not only would this help to get rid of excess stock in bulk, but customers could also enjoy the mystery experience.

Personalised promotions

Rather than offering blanket promotions across stores and online, retailers could be savvier by offering a personalised discount to only their most loyal customers.

By using data collected both prior to and during lockdown, retailers can focus on bringing back their best customers and avoid turning stores into a giant Sale. This could include giving free gifts, personalised pricing and vouchers, or VIP experiences and competitions.

This tactic has the added benefit of keeping loyal shoppers, who are more likely to be brand advocates, happy.

“The psychology of discounting is what makes people buy, so retailers are likely going to have to be more overt than they would like”

Stuart McClure, LoveTheSales

LoveTheSales co-founder Stuart McClure warns that, although such discreet promotions can protect the brand, there are limitations.

“There are huge volumes of overstock to sell,” he says. “Being discreet means you are unlikely to attract new users. And the psychology of discounting is what makes people buy, so retailers are likely going to have to be more overt than they would like with their discounts to sell everything.”

McClure recommends partnering with other businesses such as marketplace platforms, discount websites, such as Secret Sales and BrandAlley, and off-price retailers like TK Maxx.

He says such partners can drive volume while offering retailers discretion so they do not need the word ‘Sale’ plastered over their stores and websites.

Storing away to sell next year

Retailers such as Marks and Spencer, Next and Gap have opted to store some stock to sell again next year. Categories including leather, denim, formal officewear and T-shirts, which are unlikely to to go out of fashion, will be carried forward to spring/summer 2021.

Next (1)

Next is among retailers opting to roll over 2020 stock to next year

Mothballing products allows retailers to both tackle the issue of excess stock now and cut the costs of ordering new stock next year. 

Big-name retailers have reportedly been securing large warehouses to store clothing until next year, making way for the influx of ordered stock for the coming autumn/winter ranges. 

WGSN Insight senior editor Petah Marian believes that, in future, fashion retailers may need to be less reliant on seasonal stock.

She cites denim label Levi’s, whose core ranges make up 80-85% of its product, meaning it currently only has to contend with a small amount of trend-based excess stock.  

Clothes for hire

Occasionwear has taken a hit amid the pandemic, with big events including graduations and weddings all cancelled. While it has momentarily had an adverse effect on rental retailers such as Hirestreet, its chief executive and founder Isabella West sees light at the end of the tunnel.

“From February 2019 to February 2020, we saw 1,050% growth in our business,” she says. “While there has been a pause on the rental market, once lockdown is lifted we are hopeful that business will pick up as consumers may be more financially careful, but will still have a number of rescheduled events to go to.

“Once lockdown is lifted we are hopeful that business will pick up as consumers may be more financially careful, but will still have rescheduled events to go to”

Isabella West, Hirestreet

“We’ve also seen the excitement of many customers to get dressed up again post-lockdown and, while they may not want to purchase expensive dresses, rental offers a great solution.”

For retailers with excess stock, West says a consignment partnership, where the retailer gets a portion of revenue from each rental, would help brands reach new customers and make more profits on each individual garment, as they can be rented up to 30 times.

She also explains that rental companies like hers could help out with the returns process, too, as they have the cleaning equipment to properly disinfect returned clothing.

Thinking globally

It may be too late to sell a full spring/summer season stock in the UK, but demand could still be strong in other countries with different climates.

China and Southeast Asia are beginning to return to relative normality in the aftermath of coronavirus, and offer a good opportunity for UK retailers to offload summer clothing that would feel weather-appropriate in that region.

Retailers without a large presence overseas could trade on marketplace platforms to reach a bigger audience. Zalando in Europe, Alibaba’s Tmall in China, Zalora in Southeast Asia, and Catch and The Iconic in Australia are market-leaders.

Some brands are planning to sell products direct to the overseas market. London-based dress brand Rixo plans to open a pop-up shop in Australia later in the year, where it hopes to sell stock at full price.

Charity donations

M&S Rainbow Sale

M&S is donating 10% of profits from its Rainbow Sale to the NHS 

Discounts will be widespread when stores reopen, but retailers that make their Sales distinctive by adding a charity element may cut through the noise.

The pandemic has boosted community spirit across the UK, with many people taking part in sponsored challenges and charity quizzes or setting up collection funds, and this desire to give back is unlikely to disappear soon.

Marks & Spencer recently launched the ‘Rainbow Sale’ online, with 10% of clothing profits from it going to the NHS.

Other retailers such as Boohoo, Asos, In The Style and George at Asda have also created charity T-shirts, with all profits going to the NHS.

Donating a portion of sales to charities could prove popular with consumers and create positive press for retailers, which will stand them in good stead for the future.

Upcycling

Some well-known brands such as Asos, Urban Outfitters, Boohoo and Nasty Gal have been upcycling vintage garments for a number of years, mainly to appeal to more ethically conscious shoppers and gain positive publicity.

However, with swathes of fabric available in the form of excess stock, retailers could recycle and upcycle next season’s items to avoid selling it on discount or sending it to landfill.

Upcycling can require more work than simply making a garment from scratch and can cut into profits, so it will not be applicable for all brands.

However, upcycled and recycled clothing does come with some cachet, and some higher-end brands may even be able to make it work commercially.