As retailers navigate these uncertain times during the COVID-19 pandemic, different problems are arising. One such problem is the excessive inventory that many retailers are now saddled with. Many brick-and-mortar stores are temporarily closed to help contain the spread of coronavirus, and millions of Americans are cutting back on frivolous spending due to being laid-off. As a result, many retailers aren’t moving inventory as fast as they normally would, causing financial, operational and planning complications.
For example, many retailers have hundreds of pieces of apparel sitting in stores currently from Spring 2020 that will no longer be seasonal when stores open back up. Retailers will need to rid themselves of this inventory to make room for the next season’s collection. Here are some ways retailers are handling their excess inventory dilemma during the COVID-19 crisis.
Donate to Charity
One way retailers can alleviate excess inventory as a result of temporary store closures is to donate it to charity. Gifting Brands is an organization that sells designer brands and donates its profits to charity. The organization provides retailers a sustainable and charitable method of managing their inventory. Currently, Gifting Brands is accepting inventory donations from private-label and upscale brands, and some brands it already works with include Charles & Colvard, R. Riveter, and Tori Richard. Another organization that accepts inventory donations is Soles4Souls. Through its 4 the Front Lines campaign, Soles4Souls connects essential workers with shoes and clothes donated by retail partners. In this time of need for so many, consumers are likely to remember post-crisis the brands that are giving back and helping however they can.
Clearance Sales and Outlet Stores
Another way retailers can move excess inventory, while still making up for loss profits during the crisis, is clearance sales. Pier 1 announced this week that it’s permanently closing all of its stores, but will first reopen them to liquidate inventory with clearance sales. Though Pier 1 is unfortunately going out of business, this strategy will also be used by retailers that plan to continue operations. Consumers will be more likely to purchase out-of-season clothes if they’re getting a good deal. We may even see retailers dedicate entire brick-and-mortar stores for pop-up clearance or outlet locations for the foreseeable future or permanently to deal with moving excess inventory.
Third-party stores like T.J. Maxx and Marshalls are currently struggling because they have stronger brick-and-mortar businesses than they do e-commerce businesses. However, once they’re able to open their stores back up, they may have an influx of inventory from retailers looking to create space in their own stores. T.J. Maxx just relaunched its website last week, but is only accepting a certain amount of orders per day. These third-party stores are known for selling name brand items (often from a previous season) for a discounted price.
Some retailers are doubling down on e-commerce promotions to move inventory while they don’t have their stores open. While some states have started allowing retailers to open stores (with safety precautions in place), it’s unknown how long it will be before stores can operate at full capacity — and when consumers will come back. For example, Adidas is focusing on its e-commerce business even as its brick-and-mortar stores start to reopen. Many consumers are turning to online shopping at this time, and are looking for deals and discounts. More retail brands selling nonessential items will continue to offer deals, especially online, to encourage consumers to shop. These sales will attract customers and move seasonal inventory.
Many retailers offer employees a discount on their goods. If you’re a smaller company that doesn’t normally provide employee discounts or sales, but you have a large enough employee base, you may consider selling older inventory to your employees at a discounted rate, and even bundling items together. This is a perk for your hard-working employees, while also an effective way to move excess inventory.
How is your business handling excess inventory during the coronavirus crisis? Let us know!