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Climate change and excess inventory

Christmas markets crowded with buyers wearing shorts and t-shirts, swimmers in the middle of January, ski resorts without skiers; these are all clichés that have made the news this winter. The climate is changing and its economic consequences are starting to be felt everywhere, in every sector particularly in the textile one.

When clothing stores are waiting for a winter that is not coming

When the cold of winter is slow to come, consumers wait for the first waves of cold to renew their winter wardrobe.

Stores become dependent on the climate and must deal with a shorter sales period to sell a quantity that was planned for the full season. There is therefore a great risk of having a large number of unsold items at the end of the season.

This phenomenon is even more problematic because while waiting for early season sales, sellers usually don’t have any mid-season clothing to offer and end up without any immediately saleable goods. No sales, no cash, and this may impair the whole year’s activity.

Sellers therefore reluctantly accept to reduce their margins on winter clothing in order to get rid of this merchandize, thus limiting losses.

To get by, some start their winter promotions early in the season by offering large discounts normally reserved for end of season sales.

For smaller sellers that do not have sufficient financial breadth, the situation can become extremely complex as it can compromise the purchasing of the following season’s stock and in worst case scenarios lead to bankruptcy.

The impact of climate of logistic models

Unsold products and excess inventory, including any generated by climate change, impose that retailers and sellers continually adapt and become more flexible than ever before as selling seasons lose their predictability.

In fact, the purchase of winter clothing poses a risk of unsold items and additional costs that are much more important than before. Similarly, this also applies to other seasonal sales too : does swimwear sell well if the Summer season is unusually wet?

Having said this, a clothing store cannot massively reduce inventory levels without facing the risk of falling out of stock when (or if!) the expected weather finally occurs. By adapting management models and logistics tactics retailers can hedge their bets however and compensate for this new increased risk on stock levels. Smaller stocks, combined with the capacity to rapidly re-stock, are a an excellent way to proceed for example.

Reorganization does not necessarily imply a complete change of existing organizations or putting even more pressure on existing supply chains, but to adapting to the requirements of new outbound channels. In short, it’s all about keeping all options open as long as possible while maintaining maximum flexibility.

If seasonal sales do eventually take off, one can easily and rapidly respond by replenishing the points of sales as required. If however they do not take off, one can anticipate and progressively dispose of inventory on other channels, thus avoiding the risk of excess inventory.

Private sales between professionals are an excellent way to tackle such a problem; in a business to business context, the buyer has a different approach to the act of purchasing and can for example buy out of season or buy now with the intention of reselling at a future (sometimes far future) date. Also, a private sale allows the seller to protect brand/product image and avoid ‘’cannibalizing’’ sales from other channels; finally, private sale can accommodate the sale of variable quantities : as time goes by, more and more inventory can be included in the sale,  without having to complete deplete physical points of sales.

stokkly is an excellent place to roll out such a strategy and opens the way for pro-active management of inventory levels to anticipate excess inventory.

To learn more about how stokkly can help you better manage your excess inventory and inventory reduction strategy, ask for a demo right now or create a Seller account to start selling.