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Fashion’s big lockdown problem: what will shops do with all their unsold stock?

Pile of clothes - Getty Images
Pile of clothes - Getty Images

Back in 2018, Burberry sparked a firestorm of negative headlines, quite literally, when it emerged that it was burning around £28 million of unsold stock each year.

Burberry was not alone in this tactic - H&M, Nike and Urban Outfitters were also said to be incinerating so-called ‘deadstock’ - a measure employed by many brands to prevent counterfeiters copying their designs and ultimately damaging the brand’s reputation, but those headlines exposed a dirty secret in fashion that until that point, had been kept under wraps.

In the two years since that story broke, the fashion industry has reevaluated its practices. Companies like Parker Lane Group have emerged to help brands offload excess stock, and France is planning to prohibit the destruction of unsold goods altogether.

Burberry autumn/winter 2020 - AFP
Burberry autumn/winter 2020 - AFP

Today, Burberry donates unsold goods to Smart Works, a charity which helps vulnerable women get back into work via personal styling sessions and interview coaching. But getting rid of unsold clothing remains a major issue for fashion executives.

This summer, that problem has multiplied, as the coronavirus crisis has forced retailers to close brick-and-mortar stores, and the cancellation of summer events like weddings and festivals, not to mention holidays, has robbed them of the impetus that inspires customers to shop for new clothes in the first place.

Meanwhile consumers, faced with furloughs, redundancies and an insecure job market, are less inclined to spend on non-essential goods. The result of this situation is that brands and retailers will likely be left with mountains of unsold spring/summer clothes that, come September and the cooler autumn weather, nobody will want to buy. Indeed, last month it emerged that Marks & Spencer’s clothing sales had slumped by 75 percent during lockdown, and it will cost £145 million to offload the unsold inventory responsibly.

End of season sales, of course, are the obvious answer to this issue. We’re going to see significantly marked-down goods at a whole range of stores, which is good news for bargain-hunters if not for retailers, who may well be selling merchandise at a loss.

If they can’t be sold at sale prices, many brands will sell unsold goods to off-season outlets like TK Maxx, Yoox or The Outnet. A lot of fashion executives would argue that it’s worth getting rid of surplus garments this way even if it costs them, because a failure to offload this merchandise leaves retailers with an expensive storage problem.

What’s more, trend-led pieces date very quickly, so even if they can be held in storage until the next sale, they’re unlikely to appeal to shoppers six months down the line. Every second they sit on a warehouse shelf, their value diminishes a little more.So what is a brand to do with large volumes of clothes that cannot be sold?

In the past, incineration, shredding and landfill were the go-to answers, but now that brands are being (rightly) challenged about this method, they need to find new solutions - and fast. It's clearly an industry-wide issue, as Parker Lane Group says it has seen “a marked increase in client demand” ​since lockdown began.

Burberry has set an example by donating to Smart Works, a cause that has genuine need for well-made, professional-looking clothes that will help increase a woman’s chance of getting a job. Equally donating to a charity like Oxfam would help it raise valuable funds for its aid projects around the world.

LVMH (which owns Louis Vuitton, Celine and Givenchy) offloads excess goods through private staff sales, while Gucci and Moncler have issued a no-burn policy. Others, like Reformation, buy other companies’ deadstock fabrics to make new products - part of its ultra-sustainable business strategy.

Off-season outlet retailers will be the preferred approach for most companies though. “The most sustainable and commercially viable option is re-commercing into secondary market,” says Julie Hutchinson, who oversees business development at Parker Lane Group. “Our partnerships help brands salvage high rates on deadstock without compromising perceived brand equity in secondary markets via excessive discounting and sales cannibalisation in core markets.”

There is some stock which hasn't even reached retailers yet though, and has been left with the suppliers who had orders cancelled at the beginning of the crisis. Mallzee, an Edinburgh-based tech company, has partnered with the SAJIDA Foundation, a Bangladeshi NGO, to buy unused stock from factories in the country and then sell it in bundles in an eco-cardboard box for £35. Profits from the scheme will support garment workers who have been left out of work because of the slowdown in production.

In the long-term, fashion brands simply need to order less. All too often, too much product is manufactured, either because factories have high minimum orders or because buyers are overly optimistic about the sales potential of a specific look. By cutting back, they may lose out on some sales of a particularly popular item, but that scenario will also increase a brand’s cachet, as well as its ethical and sustainability credentials. It’s why we’re seeing a handful of smaller brands, like Kitri and Birdsong, switching to made-to-order business models.

“For the first time, contingency stock planning plays a central role in supply chains as opposed to being an accounting afterthought,” Hutchinson says.

So, is ‘slow fashion’ the future? Probably not for some time yet - as a society, we’re impatient and we want new season clothes as quickly and efficiently as we get our news or takeaway food deliveries.

But as the industry becomes less focused on seasonal trends (thank you Gucci) and more about timeless wardrobe treasures, there may be scope yet for a less wasteful fashion industry in the future.

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