7 tactics experts say retailers will use to manage excess inventory and attempt to stay afloat during the coronavirus

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• With stores indefinitely shuttered across most of the nation, retailers are finding themselves with a mounting surplus of unsold inventory and nowhere to sell it. 
• We spoke to several retail experts who weighed in on the tactics retailers might take to handle excess inventory, curb losses, and stay afloat during the coronavirus. 
• "The impact of the pandemic has been significant, but it's forcing retailers to rethink their past processes and create more agile ones in order to survive this crisis," a spokesperson at retail analytics firm Edited told Business Insider.
• Visit Business Insider's homepage for more stories.

As the coronavirus continues to sicken Americans and ravage the US econony, retailers are quickly finding themselves with a mounting inventory problem. 

Under non-pandemic conditions, department stores and apparel companies would normally be luring throngs of shoppers into their stores with cheery displays of bright-colored clothing for impending warm weather months. Sales associates would have replaced down jackets and wool scarves with linen tops and seersucker suits; fitting rooms would be brimming with young consumers trying on swimsuits for spring break vacations or posing in dresses and tuxedos for prom and graduation. 

Instead, these stores remain indefinitely shuttered as Americans stay home en masse in an effort to prevent the spread of the coronavirus. As a result, apparel companies have been left with mounting piles of inventory that they're struggling to sell as consumers eschew spending on nonessential items and unemployment rates skyrocket. 

According to a recent survey of more than 2,000 retailers on their business responses to the coronavirus, the e-commerce platform NuOrder found inventory reduction was one of the top-ranked priorities for concerned companies. Specifically, the study found the retailers are generally evenly split among four main focus areas — increasing online sales, cutting operating costs, reducing inventory, and discounting existing industry. 

We consulted a handful of retail experts to learn what tactics to expect from apparel companies looking to manage surplus inventory and stay afloat. While only time will tell their fates, here is what the experts said we can expect to see in the coming weeks: 

Canceling seasonal orders

Earlier this month, retailers like Gap and H&M announced they are halting orders of spring and summer apparel in an effort to offset losses and manage existing inventory. 

"We'll start to see retailers and brands tightening up supply chains, pulling back on trendy items, relying on staple pieces, reusing fabrics when possible and applying smarter discounts," a spokesperson at Edited, a retail analytics firm, told Business Insider. "The impact of the pandemic has been significant, but it's forcing retailers to rethink their past processes and create more agile ones in order to survive this crisis."

Sucharita Kodali, retail analyst at Forrester Research, told Business Insider to expect to see additional cancelations of seasonal orders, as brands look to hold on to evergreen items and begin to lack space to retain new items. 

"I do think that most are canceling or pushing off as much as they can," Kodali said. "Some of the merchandise they are holding onto for the future, such as perhaps athletic shoes which are evergreen, but anything seasonal like bathing suits they will likely try to sell with heavy promos."

 

'Pack and hold' of timeless apparel items

JoAnn Martin, vice president of industry strategy and market development at Blue Yonder, echoed Kodali and said retailers are likely to stow away timeless inventory for next year. By doing this, they can focus their resources on clearing out excess seasonal items. 

"One of the major themes I am hearing is the resurgence of pack and hold inventory," Martin said. "Retailers are determining iconic or basic product or timeless product and choosing to pack and hold the product to reflow next year. This has been taboo, but has definitely been a strong conversation among softline retailers." 

 

 

Deep discounting through off-price retailers

All of the experts we consulted agreed that brands will seek to offload their inventory using a series of tactics like deep discounting and selling through popular off-price retailers like TJMaxx, Nordstrom Rack, and Macy's backstage, among others.  

"Inventory liquidations through off-brand discounters or overseas outlets will be the norm, and we may even see some of this inventory ending up with online rental or liquidation players," Kodali said. 

See the rest of the story at Business Insider

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