European And American Fashion Retailers Are Battling With Piles Of Stock.

The new cordon blockade has led to a large stockpile of vogue retailers in stores, distribution centers, warehouses and even containers. As retail stores around the world reopen, they must find ways to get out of it.

Retailers can expand warehouses or sell them, or sell stocks to discount retailers such as TJ Maxx, or even transfer inventory to consignment sites. But these methods are not ideal, and will damage the performance more or less.

Keep hoarding

Real Estate Company Knight Frank (LEF) told Reuters that the company has received more than 6 million square feet (557 thousand and 500 square meters) of short-term warehouse rental demand since the outbreak in March.

But the expansion of warehouses is only effective for basic commodities that are not affected by fashion trends, such as underwear, T-Shirts, khaki trousers and classic sports shoes. If consumer demand rebounds, such products can be sold later.

Next, a British fashion dealer, and Adidas, a German sports giant, have said that they have already hoarded basic clothing and are planning to wait until next year to sell it again. (Adidas)

But stockpiling stocks is risky. "This is not as good as wine," said Emanuel Chirico, executive director of fashion group PVH Corp, in a recent earnings call conference. The long-term backlog will make the situation worse. "

In the United States, clothing sales in April dropped by 89% over the same period in 2019. In the UK, clothing sales in April continued to decline by 50% compared with March.

Retailers hope that after the blockade is lifted, consumers will return to stores to release depressed demand for shopping. But no one can guarantee that sales will recover soon.

Discount promotion

Many stores may also offer discount sales and transfer goods to discount retailers. It depends on the purchasing power of the consumer, the stock of the store, and how quickly the store needs to make room for new use.

In store discount is usually a better choice, because the second way of selling large quantities of stock to discount retailers can only bring small profits.

Discount retail giant TJX said in May that stocks on the market were "unbelievable". TJX's TJ Maxx and Marshalls stores resumed business this month.

Raffy Kassardjian, founder of Parker Lane Group, a UK company that provides inventory management solutions, told Reuters that during the epidemic, the company handled at least two times the number of garments per month, up to 1 million 500 thousand per month.

"Some of our customers are waiting for the opening of the retail market to assess their performance before deciding on how much inventory to be reduced," he said. He refers to the discount sale in stores and the inventory sold through discount retailers.

Transfer to consignment platform

Another way is to transfer merchandise to a commission online consignment platform, but this practice is basically open to high-end brands.

Tracy DiNunzio, chief executive officer of luxury goods consignment platform Tradesy, based in California, said stocks surged as brands needed to sell because department stores canceled wholesale orders.

Tradesy opened a new business unit in April. "Some of these brands will go online in the coming months," she said. She added that some brands may build their own landing pages on Tradesy, while others will sell them more cautiously.

Coresight Research, a market research firm in May 20th, shows that clothing is still the number one category of American consumers' spending cuts. Non essential retailers in New York are required to reopen in June 8th.

Even some consumers are making quick profits from the consignment platform. Melissa McAvoy, the founder of Luxury Experience&Co, the 43 year old event planning company, is planning to snap up goods at a discount price and then sell it at a higher price on the California's consignment website Poshmark.