The stock problem, via Reuters
I came across an interesting piece on Reuters about what companies are going to do with the piles of surplus stock that has built up over COVID-19 shutdowns. So, now the lockdowns are lifting and retailers start coming back to work, what will happen to all the surplus stock?
The main options
The key options are keeping it in storage, holding a flash sale, or sell their goods to discounted retailers that sell branded goods at heavy discounts. In the UK the real estate company Knight Frank had taken enquiries for excess stock over 6 million square feet of short-term let warehouse space in UK since COVID-19 broke out.
The risks
One of the issues for retailers with storing items of, say clothing, is that inventory gets worse with age. So UK hugh street retailer Next and German sportswear brand Adidas have stored away basic 'evergreen' items that they will offer to shoppers next year. Furthermore, although retailers hope that people will bounce back to the shops post COVID-19 lockdowns, this is not guaranteed. Some habits may change and stay different. Many people are increasingly concerned about a 'throw away' clothing culture and may be slower to buy than anticipated.
Dumping stock?
The UK-based Parker Lane Group, that helps companies manage excess stock, is dealing with around double its usual volume of up to 1.5 million items of apparel per month, according to founder Raffy Kassardjian. He said:
"Some of our customers are waiting for retail to open up to gauge their performance before they make a commitment on how much stock they want to write off" he said, referring to both selling at discount in-store and offloading to off-price.
So, there is going to be a scrabble to shift this inventory and is a story to watch going forward for retailers.
