Clothes stores have cut prices to reduce their inventory.
Stefani Reynolds/AFP via Getty Images
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Stefani Reynolds/AFP via Getty Images
The clothing stores are trying to get rid of their excess inventory by cutting down on prices.
Stefani Reynolds/AFP via Getty Images
Did you ever feel like you couldn’t have enough pajamas or athleisure?
Now, the hottest question for clothing retailers is whether they’ve got an “inventory glut” — too many extra styles, sizes or colors that aren’t selling that well.
Levi’s for instance ended up carrying too many jeans. Gap had too many sweatshirts and hoodies. Kohl’s was stocked with fleeces and pajamas. Nike discounts shorts, sandals, and t-shirts, while Adidas and Under Armor acknowledge their inventory woes.
Brian Ehrig (partner in Kearney’s consumer practice), says that “we’ve seen it all across the board.” “We’re talking tops, bottoms, sleepwear — all of those products are really seeing quite a glut.”
The story is one of excessive ordering, shipping chaos and continual pandemic changes in shopping habits. It ends with holiday sales, big price drops and full racks.
The challenge for retail shops is to order the right products.
Clothing stores are a little tightrope in any given year., It was difficult to anticipate trends and place orders months ahead of time. This was made more difficult by the pandemic. Lockdowns were implemented quickly and millions traded their office clothing for sweatpants, house clothes, and other items. Shoppers stayed home as malls collapsed and famous clothing companies went under the hammer.
The next step was a shopping boom. Shoppers rushed to order more. Then, the fairly sudden travel bonanza, in-person parties and the return to office meant everything changed – again.
Ehrig believes that many of the clothes people have worn over the past couple years may not be the same as what they are wearing today.
All of this has caused many problems for shipments to Asia. Do you remember last winter’s shortages and delays? In an effort to avoid a repeat of last winter’s delays and shortages, many shops placed Christmas orders much earlier than usual to make sure they didn’t happen again.
“No one wants to miss the holiday season, you really need that product,” says Cristina Fernández, senior research analyst at Telsey Advisory Group. “But now you got it — and you have too much. This is the problem.
Matt Friend, Nike’s chief financial officer, stated that there were “a few seasons” in which the company was not selling its products. He said delayed shipments of spring, summer, and fall season goods arrived too late, just when holiday orders started arriving.
Clothing is no longer an essential, but its prices have been declining.
Another reason is inflation. More shoppers are now weighing the pros and cons of spending so much on clothes.
“It added to a confluence of events,” Fernández says, “retailers getting some inventory late, orders that (they) didn’t really need, and then consumer demand slowing.”
Target, Kohl’s and other retailers say higher food and gas prices are discouraging people from discretionary purchases — with clothes rarely deemed a necessity.
Inflation is less if there’s less demand: The average price of apparel has fallen 4% in the last year, while other goods have risen 4%. The October spending at clothing shops rose by 3% compared with last year and will likely decline during the holiday season.
Adam Davis is Wells Fargo’s managing director and works directly with departmental stores.
Gap and J.Crew are not the only companies that have addressed their inventory woes. They also cut prices and stage sales to ease pressure. Many are giving away their evergreens, including generic tee-shirts and other clothing that might be sold next year. A lot of clothes will also be heading to Ross or T.J.Maxx discount stores.
Do you think this means that holiday shoppers will be getting huge discounts? Davis, Ehrig and Fernández all say, yes, very likely. Are people going to decide that they want more clothes? It’s another thing entirely.