Stefani Reynolds/AFP via Getty Images
Remember when we couldn’t get enough athleisure or pajamas?
Now, the most burning question for apparel retailers is whether they have “overloaded inventory” – too many extra styles, sizes, or colors that aren’t selling very well.
Levi’s, for example, ended up with too many jeans, Gap with too many shirts and hoodies, Kohl’s with fleeces and pajamas. Nike cut shorts, t-shirts and sandals, and Adidas and Under Armor also acknowledged their own inventory issues.
“We’ve really seen it across the board,” says Brian Ehrig, partner in consumer practice at consultancy Kearney. “We’re talking tops, bottoms, sleepwear – all of these products are really in a glut.”
It’s a story of overordering, shipping chaos, and constant pandemic shifts in shopping habits. And it ends with shelves full, price cuts, and promises of great holiday deals.
Retailers struggle to place orders correctly
Every year, clothing stores go a bit tightrope, trying to predict trends and order goods months in advance. The pandemic has made this even trickier. First, in the blink of an eye, millions of people swapped their office clothes for sweatpants and house dresses. Shoppers stayed at home, malls emptied and multi-storey clothing chains went bankrupt.
Then came a shopping boom. Retailers stepped on the accelerator pedal, ordering more and more. Then the rather sudden travel bonanza, in-person parties and back to the office meant that everything changed – again.
“A lot of things people wore in years past aren’t the same things they wear now,” Ehrig said.
Through it all, shipments from Asia have experienced many disruptions. Do you remember the delays and shortages last winter? Eager to avoid repetition, many stores have decided to play it safe with this year’s Christmas shopping demand, placing those orders even earlier than usual.
“Nobody wants to miss the holiday season, you really need this product,” says Cristina Fernández, senior research analyst at Telsey Advisory Group. “But now you have it – and you have too much. So that’s the dilemma.”
For example, Nike CFO Matt Friend said the company had “a few seasons hitting the market at once” because delayed shipments for the spring, summer and fall seasons were coming too late. , just as holiday orders started to arrive early.
Not a necessity, clothes have seen their prices drop
Meanwhile, inflation has led more shoppers to think long and hard about how much they’re willing to spend on clothes.
“It added to a confluence of events,” says Fernández, “retailers are getting backlogged inventory, orders that (they) didn’t really need, and then consumer demand slows down.”
Target, Kohl’s and other retailers say rising food and gas prices are discouraging people from making discretionary purchases, with clothing rarely seen as a necessity.
Less demand means less inflation: clothing prices rose less than other goods, only 4% more than a year ago, falling in the last two months. Spending in clothing stores rose about 3% in October from a year ago and is expected to decline over the holidays.
“I think what’s really caught (retailers) off guard is just the push back and the shift in consumer buying habits,” says Adam Davis, who works with department stores and other retailers. as CEO of Wells Fargo.
Most companies, including Gap and J.Crew, have solved their inventory problems by cutting prices and holding sales. Some are packing more evergreen items, like generic t-shirts that they might try to sell next year. Many clothes are also heading to discount chains such as TJMaxx or Ross.
Does this mean general holiday discounts? Davis, Ehrig and Fernández all say, yes, most likely. Will people actually decide they want more clothes? It’s a whole other thing.