Currently as I walk through shopping malls and look in apparel retailers it is immediately apparent as a customer that stock is in bountiful supply, full size range still available in almost every style towards the end of the winter season, with spring and summer lines making their way on to racks as well. There seems to be no better example of a downturn in customer shopping (buying) habits than in the many clothing retailers. When money gets tight, or that extra cash is put into the mortgage just in case interests rates go up, one of the first discretionary purchases that is often put off until later is new clothes, as long as last year’s jeans still fit!
As a result of the long overseas supply lead time in Australia, orders are normally placed a season ahead based on what was sold previously and with an increase factored in based on current trends. This long lead time is due to us not having a local clothing manufacturing industry any more; clothing is sourced predominately from Asia and the Subcontinent with their low production costs that cannot be matched in Australia. Most clothing retailers do not want to get caught out not having enough stock to meet customer demand, and the attractive bulk purchase rates will always entice that extra few cartons to be ordered. A half full container costs the same to ship as a full one!
With this backlog of cartons that I imagine are still sitting in the stock rooms and reserves everywhere, comes the difficult decisions for the Management teams to take.
Do we discount the stock to get it moving?
How much do we discount, 20%, 50%?
What do we do if it still does not move?
Spring / Summer stock is arriving, do we put out now?
Do we box up the winter unsold stock and hope that it is in fashion next year?
As I look through the many clothing shops I visit, being the dutiful Husband and sit outside fitting rooms with the other similar Husbands (wishing we were mowing the lawn or out fishing), one point really stood out.
I cannot see the Clothes for the signage!
This was not in just one Store, but every Store we went into. Large racks bulging full, straining so much that when you try to remove one coat hanger five more fall off, causing the already over worked staff member to sigh and keep bending over picking up. The amount of signage screaming out in all colours and fonts, neat handwriting and messy, crossed through with extra markdowns, it just went on and on.
Many Stores still were also trying to use that amazing merchandising item, which is still held in high regard by many Store teams. That item that they hope can make the difference and sell all those thousands of dollars worth of inventory sitting idle, clogging up the supply chain all the way back to Shenzhen.
The sale balloon!
What is the solution you ask?
Well unfortunately this season is over for many clothing retailers. Many racks I saw still had full size ranges and were priced at 70% of the original price. The profit is now probably gone!
They can try to clean up those racks and free up space so that they can be shopped easily. We walked out of many Stores empty handed as it was just too hard to shop and find what we needed or may have been interested in.
Clearance lines must be looked after and displayed with as much detail and love as the new season apparel. Many markdowns can be saved if correct merchandising is adhered to throughout the season. Try merchandising clearance lines by price point, i.e. $10 racks. Try merchandising by size if volume permits.
And the most, most important point of all is to have sufficient staff allocated to keep the racks clean and well presented. No one likes to have to ‘dig’ through a stack of tangled garments and coat hangers just to save a few dollars to buy a garment that no one else has wanted to buy.
In summary,
The entire season’s profits can be quickly eroded if the correct disciplines are not used during the clearance phase in Apparel retailing;
· Continue merchandising the clearance until sold (if you ignore the clearance lines it will hurt your bottom line in a big way!)
· Only take markdowns as needed, the smaller the better, review daily as needed until the sell through rate increases.
· Do not over do the signage; you have to see the Clothes still!
· Keep the racks clean and tidy at all times
· Rearrange, reposition as necessary, and keep the displays fresh. If it looks the same, your regular shopper will walk straight past.
· Keep the balance right between clearance and new seasons garments. Watch the weather and adjust the balance as needed, daily if required.
Come on summer
