Should fashion retailers mothball spring?
Through a special arrangement, presented here for discussion is a summary of a current article from the blog of Nikki Baird, VP of retail innovation at Aptos. The article first appeared on Forbes.com.
In fashion, mothballing is possible but traditionally considered unthinkable.
Sitting on inventory is equivalent to stuffing cash in a mattress. Yes, you technically “have” the cash, but it’s not doing any work for you. And it’s unprotected — boxes of clothes in a warehouse could literally go up in flames. It’s also risky because fashion tastes change.
Yet, with retailers likely having to mark down below cost between 70 to 80 percent of inventory across the marketplace just to get it out of stores, the risks and strategies of holding inventory until next year change.
At best, fashion retailers had sold through the early part of their spring 2020 seasons. Some basics or carryovers can be extended into summer and fall with little risk. Some stand no chance of working as part of a fall assortment.
If some inventory is packed and held until next year, you don’t have to mark it down all at once. The strategy assumes fashion tastes don’t change dramatically over the next year. It does lock up cash, but it also makes room for other inventory that has a better chance to sell.
But which inventory do you pack up? Banking on tastes not changing much during a pandemic, retailers may choose to pack up the highly seasonal inventory that consumers haven’t seen yet. They can stretch basics into summer and fall without having to take deep markdowns and supplement with more on-trend fall pieces to help those basics look new again.
Yet some retailers may choose the opposite: packing up the perennials. The thought is, they’ll be able to sell them next spring, no problem. Yes, they’ll have to mark down the highly seasonal stuff that is in stores and the supply chain right now, but then they’ll be able to bring in all new items for fall — new basics, new trends.
The difference in the two approaches comes down to two things: how desperately a retailer needs cash and how confident they are in being a tastemaker vs. a trend follower.
DISCUSSION QUESTIONS: Should fashion retailers consider packing up spring 2020 inventory for 2021? Would you lean towards holding basics or trendy inventory?