How Are Retailers Dealing With Stock Build Ups?
With the closure of many physical stores across the world due to coronavirus restrictions, many brands have been left with vast amounts of stock from Spring 2020 filling warehouses, distribution centers, and more.
British retailer Next has admitted that the amount of stock clogging up its warehouses could inhibit operations and stop it from being able to take in any new product. Its solution has been to use-third party storage facilities, while also holding some stock in source countries, which is costing them an additional £2 Million.
Others have taken to extreme discounting online to move stock quickly, but this has the potential to damage their brands. Chris Griffin, CEO of flash sale site Secret Sales, and former eCommerce director at Superdry had this to say:
“The longer the lockdown lasts, the larger the stock issue becomes. Retailers need to find a way of clearing stock that enhances, rather than damages, their brand equity. Constant discounting on your own platform devalues your brand and your full-price stock. It becomes a spiral.”
One option retailers may take is to use off-price channels to sell discounted goods. A report recently published by McKinsey has argued that there may be many benefits for off-price retailers like The Outnet during this time of uncertainty.
Some brands are creating or revamping their own off-price platforms to move stock. Womenswear label Lazy Oaf is using its relaunched website “Oaflet” to sell items with discounts of up to 80%. Others are announcing flash sale events, like Gianni, who launched a six-day pop-up Sale with discounts on 400 items.
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Selling items in other countries has been an important avenue for retailers, with brands looking to countries who have been able to re-open shops, or have yet to go into lockdown. French connection, for example, is working with John Lau, founder of Ecargo, to help brands move goods from the UK to the Chinese market, where there is “real opportunity”.
Donations have been a way to get rid of stock, while also helping those in need, and creating good PR for brands. Companies like Boden have donated clothing to various NHS trusts, while ALLBIRDS have said they will be donating a pair of shoes to any NHS workers on the ‘frontline’
Heavy discounting is likely to happen across retail, but it is clear this is not the only option for brands looking to clear their Spring 2020 stock.
From an eShopWorld perspective, brands trading on the platform have seen an average growth rate of approx. 150% during the crisis period. Being able to pivot effortlessly and push volume through international channels has seen a big uptick in volumes, as brands heavily promote their goods in markets that have been kept open in terms of eShopWorld’s ability to serve same markets.
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Asos Tackle Covid-19 Issues With AR
Online retailer ASOS is speeding up the roll-out of its “See My Fit” feature, which utilizes Augmented Reality (AR) to show users what an item looks like on a range of models, all with varying looks and body types.
The sudden urgency has been prompted by coronavirus restrictions, as the AR innovation enables models and staff to shoot products while still sticking to government guidelines regarding social distancing.
The feature, which was initially launched in January, maps Asos outfits to 6 real-life models, allowing users to find a model with a similar body type to themselves, and then see how the item looks on that model. Users are able to view up to 500 products each week, as the company works on digitally mapping their product line to each model.
Asos have been announcing a range of initiatives that allow models to work from home and maintain social distancing. Models and Asos insiders have been asked to shoot products from home, and photographers are taking ‘flat images’, where the items are pictured on hangars in some cases.
Tim Carey, senior content manager at Asos Studios, said in a statement: “We’re fortunate enough to have been experimenting with Zeekit’s AR technology for a while, which has meant that we could scale this tech up at short notice. It’s a great tool for us to have at our disposal, helping us drop new items on-site each week and provide customers with realistic product images in a studio setting, while protecting the wellbeing of our models and staff.”
Report: Covid-19 Changing The Way Shoppers Buy
A new report from EY suggests that there will be long term changes in the way consumers buy products due to the Coronavirus pandemic.
In the study, it is explained that 4 in 10 UK based shoppers believe that Covid-19 will fundamentally change the way that they shop. The EY Future Consumer Index questioned just shy of 1,400 UK adults about post-coronavirus shopping habits. Some of the key statistics include:
- 26% of UK shoppers are spending less across all categories because coronavirus has affected their employment status.
- 10% are spending more across categories.
- 42% say Covid-19 will fundamentally change the way they shop.
- 25% will pay more for trusted brands, while 24% will pay more for ‘ethical products’.
- 57% say they will spend more on brands that are supporting the community
- 63% say they are more likely to spend on those who are supporting the community.
EY believes that many shoppers will continue to cut the amount of money they spend, with 71% already spending only on essential items, but spending slightly more on food, health, and personal care products. Younger shoppers will make up what EY call the ‘back with a bang’ category. 76% of this group are under 45, and 63% are employed full time. Within the group, 44% are buying more online, 56% are using more food delivery services, and 50% are spending more on groceries.
Silvia Rindone, partner in consumer product and retail at EY, said: “When restrictions start to be eased, companies will need to adjust their business strategy and revisit their cost and operating model to deal with increasingly price sensitive and cautious consumers. Looking beyond the immediate effects of Covid-19, few consumers expect to revert back to pre-crisis behaviours any time soon. In these uncertain times, it’s impossible to say how long the transition will take or whether different consumer trends will emerge. We hope our new index gives a perspective on the changing consumer and help consumer-facing companies stay relevant and plan for the future.”