The main concern for high-street fashion brands in late 2021 and the first half of 2022 was to find enough clothes to sell, as demand was heating up in Europe, while key manufacturing hubs in Asia were under strict restrictions to curb their Covid-19 waves. However, the situation is drastically different today, with many of the key fashion players - from Nike to H&M - suffering from excess inventories, while warehouse prices are soaring, and consumers’ budgets are increasingly squeezed.
Indeed, the impact of the war in Ukraine, all-time high inflation, and the rampant cost-of-living crisis have all slowed demand since late spring 2022, causing products to start piling up again. To make matters worse, many industry players used 2021, with its post-lockdown boom in demand and low inventories, as their baseline for 2022, and have suffered from shipping delays, which has left them with more stock that is difficult to move.
Hence, many high-street players are already running aggressive promotions in the hope of being in a better position by the first quarter of 2024. In the UK, for example, Asos, Boohoo and John Lewis are now offering steep autumn discounts.
Besides discounting, what other options could boost sales in this challenging context?
The glum economic outlook for the UK and Eurozone for the next 12 months will lead consumers to increasingly seek value in their shopping choices, but ‘value’ should not be understood only as low prices. In fact, European consumers primarily look for comfort, durability, quality and perfect fit when buying wardrobe items, and as their budget for non-essentials is tightening, they are likely to seek garments they can wear on various occasions depending on how they are accessorised. Companies and brands able to communicate the versatility of their collections should attract consumers’ attention in this clouded context.
Moreover, Euromonitor’s Voice of The Consumer: Lifestyles survey highlights the importance of experiential shopping, with 54 percent of European consumers preferring to shop in stores with engaging experiences, and over 30 percent of respondents going in store to browse for inspiration.
Hence, besides steep markdowns, which might devalue a brand’s image, fashion players could consider other measures to reduce their excess inventory and boost sales this winter, namely:
- Strategic partnerships with off-price channels and outlet villages
By partnering with offline partners and outlet villages that offer a great customer experience, such as Value Retail’s Bicester Village outside London, or La Vallée Village in the Paris region, entry-luxury, premium and mid-priced players have an opportunity to move their stocks while extending the reach of their brand, since they can offer a positive experience equivalent to that of a flagship or department store to consumers who might not be able to afford their products at full price. Moreover, it gives them an opportunity to deal with their unsold stocks in a sustainable way and build a positive brand image. Euromonitor’s Voice of the Consumer: Lifestyles survey 2022 showed that about 40 percent of European consumers earning over 100,000 euros per year demand that fashion brands be responsible and purpose-driven.
- Tapping into FOMO with flash sales and online off-price platforms
Creating a sense of urgency and scarcity, platforms such as Veepee, Brand Alley and Zalando Lounge allow mid and premium brands to sell old stock without damaging their image. Indeed, because only members can join the events, the difference in prices across distribution channels is not disclosed openly, preserving their chance to sell their collections at full price in other channels. For more mass brands, platforms such as Flashprice.co.uk can help sell unsold stocks piling up in stores and warehouses by gamifying the hunt for the best bargains. Such platforms also typically offer bundles and allow partner brands to club fast-moving products with slower-moving ones, or to mix older and newer products together to give consumers the perception of getting more for their money, while leveraging the popularity of certain items to move others.
- Exploring the potential of pre-Christmas holiday pop-up stores
In today’s challenging economic context, the surplus of retail space and widespread decreases in commercial leases since the pandemic arguably give retailers and brands an opportunity to add a physical presence to their business on a relatively low budget via pop-ups.
Pop-up stores should be considered by brands and retailers in order to move closer to suburban customers and tap into demand outside the largest cities, where new pockets of growth have emerged since hybrid working arrangements have normalised. This is illustrated by Harrods H-Beauty concept stores opening across the UK since 2020.
With many shoppers expected to start their Christmas shopping early in 2022 in order to spread the cost, we believe that pop-up stores promoting a gift-giving mindset, as well as messages around self- love and self-improvement, could be particularly effective at boosting sales and reducing unwanted stocks. Post-pandemic, a growing number of consumers are investing in taking care of themselves and admit to regularly buying themselves small treats.