Once only whispered about in hushed tones, stock clearance is now a valuable route to extra sales, with a growing number of options for labels that need to shift ageing product
Stock clearance has never been more crucial for brands. Independent consultant Malcolm Newbery says the supply chain has been radically affected by the credit crunch. Stock clearance is nothing new but the scale of its effect definitely is. “From high-end luxury to budget own brand, there are companies that have had to deal with 2%, 5% or 10% of overstocks that will now be looking at 10% or 20%, maybe even 30%,” he says. And unless they want this stock clogging up warehouse or shop floor space, or snarling up the supply chain, it is imperative that brands shift it.
Fortunately, the avenues through which retailers can clear stock are expanding. One route is through the dedicated websites that sell designer clothing at up to 80% off, but do so in an environment conducive to premium positioning.
Cocosa, which launched in October, operates on a membership-only basis, giving the site a sense of exclusivity. It runs five 48-hour Sales a week, each exclusively of one label; at the time of writing, Pauric Sweeney, Matthew Williamson and Kors Michael Kors were the labels on offer. The website has a glamorous feel and is underpinned by sharp editorial. Business is burgeoning. “We are thrilled with the way it is going,” says a spokesperson at Cocosa. “We have seen double-digit growth since Christmas and brands are approaching us that were completely uninterested when we started.”
Brand Alley is a similar site, offering the likes of Karen Millen and Chloé. “Being members-only helps our brands understand that we are not a bargain-basement website,” says marketing director Melissa Littler. Brands are also turning to designer outlets, which continue to defy the struggling retail market. Sales at the seven UK McArthurGlen Designer Outlets are up by more than 5% compared with the same period last year. Designer brands in particular continue to be popular, with an average sales increase of more than 17% across the UK centres.
Julia Calabrese, chief executive of McArthurGlen, says: “Although UK shoppers are tightening their purse strings they still want to buy quality items with a good ‘cost per wear’.” In these outlets, the brand controls the look of the shop, the staff and the way the products are marketed, as well as deciding prices. A spokesman for Value Retail, which runs similar outlets, says: “We encourage our brands to mimic the look of their high street shops as much as possible.” He adds that a record number of retailers are approaching Value Retail to open stores. TK Maxx also reports sales to January 09 are up 4% year on year.
Product on the move
Newbery says the outlet is the most common method of clearance. “This can be a store in an outlet village or mall, or maybe even a designated store already in the chain that is used for this purpose,” he says. Other brands with a global footprint, he explains, can move their collections on to another territory. “I know of European retailers that simply sell the same collection six months later in South America,” he adds.
Brands can offload job lots but have to be aware of the pitfalls. Newbery says that one retailer sold a swathe of product to a third party under the agreement that it only be sold in certain Far Eastern territories. “But it ended up in Japan, undercutting its customers,” he says.
Some stores plan events, such as Debenhams. “For its Blue Cross Sales it can wait until four weeks before the Sale to allocate the products and up to two weeks before until it decides the depth of the reduction,” Newbery says. “Other companies use pop-up stores to create a buzz about a limited availability - and this is particularly viable now as so many landlords have empty locations.”
eBay inspires Schuh to branch out
When footwear chain Schuh noticed that people were buying footwear in its Sales and selling it for higher prices on auction website eBay, it decided to get involved. Selling directly through eBay proved so successful that Schuh created its own online discount store, Branch 309. “You have to be aware of where your potential customers shop, and in this market that is places where there are discounts,” says Schuh’s head of ecommerce, Dan Lumb. “We started approaching our brands and getting rid of their old stock on eBay. Our record is 8,000 pairs of shoes in one week.”