Almost half Of US Fashion Stores Are Stuck With Excess Stock
Almost half of US fashion stores are stuck with excess stock after a disappointing start to 2023, according to a survey by Inventory Planner
- Downturn in consumer spending has left 44% with surplus stock
- Excess inventory is worth $74k on average
- 20% of excess stock was written off altogether by apparel sellers in 2022;
- Inventory Planner’s Sara Arthrell said: “Excess inventory is a huge issue for fashion retailers at this time of year. The key to avoiding inventory waste is by forward planning and having rapid response software which allows retailers to pivot quickly to fill order gaps and ditch items which are not selling.”
Almost half of fashion stores are stuck with excess stock after a disappointing start to 2023, according to a survey by Inventory Planner.
It found that 44% of apparel sellers still have goods they cannot sell after January discounting.
Last year 20% of excess stock was written off altogether by clothing retailers.
And US fashion stores are sitting on an average of £74,000 worth of excess stock due to the downturn in consumer spending. It has little value and is costly to store.
The results come from a new poll of 500 fashion retailers from Inventory Planner, which provides forecasting and planning software for businesses.
The data comes from a new report, which provides a stark warning to clothing retailers about the dangers of being caught with excess stock.
More than half of fashion retailers (56%) told Inventory Planner there would be ‘dangerous ramifications’ for their cash flow if they failed to sell excess stock. The same number said inventory overhang was a ‘major concern’ for their business
Four in ten (42%) said they were ‘greatly concerned’ about their ability to shift excess stock and 44% said it would be difficult to absorb the loss of marking down prices and liquidating unwanted products.
Almost eight out of ten apparel retailers (78%) are planning to offer even more discounting to try to shift the unwanted products.
The survey found that 47% of fashion stores struggle to predict customer demand and sales in this fluctuating market and 27% do not know how to calculate excess stock.
Inventory Planner CMO Sara Arthrell said: “Excess stock is a huge issue for fashion retailers at this time of year.
“The key to avoiding inventory waste is by forward planning and having rapid response software which allows fashion retailers to pivot quickly to fill order gaps and ditch items early which are not selling.”
Clothing company Joules.com said extensive discounting to clear inventory had hurt its profit margins before it crashed in November last year.
Peak trading in December for many fashion ecommerce sites was hit by a downturn in spending as many consumers start to run low on savings, with several fashion giants issuing disappointing trading updates including Unbound Group, the owner of the Hotter footwear brand, as well as Dr Martens and ASOs.
Fashion retailers are sitting on piles of unsold clothing due to a hangover from previous supply chain issues, and poor demand for current season stock.
An easing of supply chain disruption has led to a pile up of products in warehouses as lead times from east Asia have shortened.
This means that retailers faced with clearing old stock are receiving new items quicker than expected.
Some retailers are hibernating excess winter stock to sell in autumn/winter 2023 rather than discounting.
Arthrell added: “How to clear excess inventory without discounting too heavily or writing off stock is the headache facing many fashion retailers as we head towards spring.
“Many fashion retailers struggled with product shortages during the pandemic due to understandable supply issues. Now they are faced with the opposite problem – a glut of unsold merchandise which is eating into profits and damaging cash flow.
“Discounting cripples margins and is not sustainable over the long-term with the cost of living headwinds all fashion retailers are facing.
“That’s where technology comes in. Inventory planning provides accurate replenishment recommendations based on years of purchasing data so you are never under or overbought on inventory.”
Inventory Planner has released a free report on how to tackle New Year excess inventory, which is available here.
Contributed by Mark Hook, VP, Global Brand, PR & Comms, Brightpearl by Sage,Inventory Planner by Sage