Clothes Retailers Offering Deep Discounts, but Nobody's Buying
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What is the main topic discussed in this episode?
Here's your Money Briefing for Tuesday, April 21st. I'm J.R. Whelan for The Wall Street Journal.
Why are shoppers not buying spring clothes during the pandemic?
Many Americans are staying at home during the pandemic, and that means they don't really need to shop for new clothes. In response, big retailers are offering spring fashions at deep discounts online.
And who wants to buy clothes for a life that you may not be able to resume for who knows how long? I mean, going to events and social occasions, you know, you just might not need the kinds of clothes that you needed in the past.
That's Wall Street Journal reporter Suzanne Kappner. Coming up, she'll discuss the lengths to which retailers are going to try and unload their unsold inventory.
With their work-from-home uniform consisting of blue jeans and a sweatshirt, many Americans have stopped buying new clothes. And that has retailers scrambling to unload this year's spring apparel. Wall Street Journal reporter Suzanne Kapner is with us to discuss. So Suzanne, how are some retailers trying to get rid of inventory? They must have a lot stocked up.
Well, it's really hard right now because so many stores are closed, so they can't do it the normal way, which would be, you know, holding big sales in their stores.
How are major retailers discounting spring apparel online?
They are, you know, discounting on their websites, but people just are not in the mood to buy apparel or fashion or footwear right now. And we've seen sales for those items, even online, you know, online sales for those items have been down year over year. Last week, Saks was offering 70% off spring dresses. It was like a one-day flash sale, but 70% off is a big reduction. That's the kind of sale you see end of season. Gap, the Gap brand, was offering 60% off of everything last week. J.Crew was offering 60% off select items. So, you know, it's pretty deep. Then, you know, another way is to sell the goods to off-price chains like TJ Maxx, but those stores are all closed as well, so they're not really buying much now either.
It's a real problem for them.
Normally, consumers would rush toward discounts like that.
They would, but you know, they've got other things on their mind. When I've talked to shoppers, they say, you know, if it's not an essential item, they're just not interested in buying it. And who wants to buy clothes for a life that you may not be able to resume for who knows how long?
Why aren't deep discounts and off-price channels solving the inventory problem?
I mean, going to events and social occasions, you know, you just might not need the kinds of clothes that you needed in the past for the next year or so.
Can't the retailers just hold on to the clothes until next spring?
Well, you know, if it's fashion, it goes out of style. So that's a big problem. It's like an executive said, it's not like wine. This kind of inventory does not get better with age. And there are some, you know, basics, things that are in season, that are in style year after year. They will try to pack away. But there is a cost to that. You have to pay for the warehousing and the storage. And retailers, you know, they really need right now more than anything packaging.
Can retailers just hold seasonal fashion inventory until next year?
to raise cash. And one way they do that is by selling goods. So, you know, they don't want to have to sit on this stuff if they can't help it.
But aside from finding ways to sell the clothes, how are retailers trying to raise cash?
We've seen a lot of the big chains, you know, draw down their credit lines, refinance debt and try to boost their liquidity in various ways. But, you know, in normal times, the way retailers make money is to sell their goods and they convert inventory to cash. And they're not able to do that right now.
How about shipping the unsold clothing overseas?
What cash‑raising steps are retailers taking besides sales?
Well, the problem there is, you know, stores around the world have been closed due to this virus. And, you know, in China, stores are just starting to reopen, but there is a backlog of goods there as well. So that's not really a realistic option.
Do retailers often donate unsold clothes?
That's usually in a lot of respects the last stop because, you know, they'll get the least amount of money recovered that way. But some nonprofits are saying they are, you know, girding for a record year of donations because retailers really have nowhere else to put this stuff.
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:05–0:10
2
Why are shoppers not buying spring clothes during the pandemic?
0:10–1:17
3
How are major retailers discounting spring apparel online?
1:17–2:24
4
Why aren't deep discounts and off-price channels solving the inventory problem?
2:24–3:02
5
Can retailers just hold seasonal fashion inventory until next year?
3:02–3:37
6
What cash‑raising steps are retailers taking besides sales?
3:37–4:39
7
How are luxury brands handling unsold merchandise differently?
4:39–5:26
Speakers
2 identifiedMore from WSJ Your Money Briefing
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