Slowly but surely, the world is reopening around us, and people are starting to consume more again. But what will happen with last year's merchandise that hasn't been sold due to lockdown? Will all this merchandise be released into the market anyway? Because we are talking about tons of clothing!
We will tell you more about it in this blog.
What is the market telling us? The Corona pandemic has caused considerable damage in the private sector and in the economy worldwide. The apparel and fashion industry have suffered greatly. Sales losses of 30-50%, job losses and mountains of merchandise in closed stores and warehouses which cause problematic overstocking. The question most people are asking is, what will happen with unsold goods from last year’s collection? Well, what is the market telling us right now? Firstly, the fact that in many countries the stores have been able to re-open is a first sign. The Netherlands has reopened in May, England and Wales since mid-April and now Germany is following this trend too. This is a very good sign for the overall trade and industry and gives hope for “the new normal”.
Secondly, the very pleasing figures within the industry showing frequent growth is a key metric in predicting the trends. In the early stages of reopening stores in England the industry was blown away when it reported a weekly frequency growth of over 200%. And this is not unusual, because the Netherlands has shown similar growth results after reopening.
Overall, very pleasing news and very important progress for the industry.
What will happen in 2021 with the goods from 2020? As mentioned earlier, overstocking is a major problem. But what happens with the clothes that are not sold? Will they just get burned? Or thrown in the trash? Certainly not!
All around us we are seeing fashion stores pushing their collections forward to compensate for lost sales and lower as much of the overstock as possible.
Thomas Fischer, consultant for recycling management at the Fachverband Textilrecycling, speaks of "150,000 tons of clothing that will soon be pushed into the market. That's 54 soccer fields full of fabric bales." Can you imagine!
Is there a new trend? Many goods from last year were not seen by the consumer, and the need for these products is still there. Because the classic protocol for the summer and winter sales has actually not been valid for a long time, and already showed the first sharp moves of change in 2020.
Due to delivery delays, in the first lock down, the initial allocation of many collections was changed for the first time and used more dynamically in the market than in previous years. The market has reacted positively to this and furthermore industry experts have been demanding this change for years. An individual adjustment of the initial allocation to the needs of the consumer brings many advantages, such as margin optimisation, through higher sales and lower discount. This trend will continue to grow.
Fashion recovery plan The next step is to successfully distribute these products into the market. The question is, how do you do that? What is necessary to quickly cover the dynamic demand, with the optimal products and quantities?
The answer is detailed analyses and super speedy reactions on this data. Which raises a new question. How will the retailers and industry ever find all that time to do these analyses? Retailers often manage hundreds of brands, with sometimes 6-24 delivery dates. There is no time for detailed analyses on size and color level.
Moreover, retailers will probably not continue to invest in buyers, due to heavy losses in the years before. This concept no longer works. This means more responsibility for the industry. However, more responsibility needs to go hand in hand with more control.
But how should the industry handle this challenge and realize its growth potential?
Relying on software The effort of the analyses, especially on style, color and size level, for each product in the collection is incredibly high - not to be done manually, if you consider that today's shopping behavior is dynamic and fast.
Even solutions such as 1-on-1 replenishment or static reorder targets, cannot keep up with consumer demand.
In order to keep up with consumer demand, solutions are needed that analyze each product daily, on style, color and size level, based on demand and make independent decisions. Using logic beyond our human brain will help calculate the best replenishment cycle allowing you to focus on other important things like marketing your store. Companies like YAYA, adidas and Van Bommel have been working with Chainbalance for a few months already and they have all seen massive changes in their sales, lowering overstock and freeing up more time to focus on full recovery.
Read their business cases here and find out how you can also successfully recover from Covid-19.
Chainbalance - make the consumer the heartbeat of your value chain!