As retailers across the world mull over ways to handle heaps of unsold inventory, their options include storing and selling next year, selling to off-price retailers, teaming up with e-commerce players to ramp up sales online, slashing future orders and holding expansion plans. Fibre2Fashion offers them F2FMART, a marketplace for ready-to-sell and wholesale goods.

•     In the United States, clothing sales fell by 89 per cent in the April-June quarter over the same duration in 2019.

•     In the United Kingdom, clothing sales dipped by 50 per cent during April-May compared to an already-squeezed March.

•     With all this unsold clothing, retailers need to decide the best way to manage their inflated stock levels.

•     Forget fast or slow fashion, now it's ground to a halt.

•     Dumping inventory in bulk to off-price players returns just pennies on the dollar for retailers.

•     Apparel companies-from elite fashion houses to mass-market chains-are saddled with an inventory glut following months-long closures during the pandemic. Now they are trying to get rid of the excess without angering waste-conscious consumers or harming their brands.

•     Some fashion companies have for years quietly destroyed unsold goods rather than allow them to be sold at a discount. But that practice is drawing increasing scrutiny from environmental groups, shoppers and governments, forcing brands to find fresh ways to move clothes, shoes and other products piling up in their inventories.

A mountain of apparel stock has been piling up in stores, distribution centers, warehouses and even shipping containers since the COVID-19 lockdowns started. As retailers reopen around the world, they have to work out how to get rid of it. Retailers hope that easing of lockdown measures will see shoppers return to stores, eager to unleash pent-up demand. But there is no guarantee that sales will rebound any time soon.

Real estate company Knight Frank told Reuters it had fielded inquiries for excess stock for over 6 million square feet of short-term let warehouse space in the United Kingdom since the pandemic took hold there in March.

Apparel chains, including British high-street retailer Next and German sportswear brand Adidas, said they had stashed away unsold basics, with the aim to offer them to shoppers next year instead.

But stowing away piles of inventory is risky. "This is not like wine that gets better with age. Your inventory gets worse," said Emanuel Chirico, chief executive of PVH Corp, which owns Calvin Klein and Tommy Hilfiger, in a recent earnings call.

Dumping inventory: Many stores are likely to pursue a combination of holding sales as well selling stock to off-price retailers. But revenues fall to penny levels in such bulk liquidations.

  • US off-price retail group TJX, which started opening its TJMaxx and Marshalls stores this month, said in May that there was 'incredible availability' of stock in the market.

  • UK-based Parker Lane Group, which helps companies manage excess stock and advises on off-price selling, is processing at least double its usual volume of up to 1.5 million items of apparel per month, founder Raffy Kassardjian told Reuters.


India Ratings and Research (Ind-Ra) said the Indian apparel retail sector is likely to witness a 40-45 per cent decline in revenues during 2020-21 and a demand recovery is expected in the festive season this year if COVID-19-related fears subside. The rating agency said it expects companies in the sector to weather the near-term demand volatility and sluggishness through effective liquidity management, while also improving their competitive advantage. 


Ind-Ra said a continued countrywide lockdown beyond the second quarter of 2020-21 or a prolonged impact of the pandemic will lead to a further downward revision of revenue estimates. By the third quarter of this fiscal, it expects overall sales of the sector to touch around 85 per cent of the pre-COVID-19 levels. "Consumer behaviour patterns such as 'revenge buying' may play out and support revenues," it noted. It expects pre-COVID-19 level demand in the sector by the fourth quarter of 2020-21, with the impact of pandemic-led demand erosion gradually declining, and economic recovery accelerating.


Many retailers told a financial daily that they have slashed future orders and are in talks with more e-commerce players to ramp up sales online. Expansion plans are on hold as well, as shop owners try and save cash in a scenario where it could be months before shoppers begin trickling into stores.   Apparel retailer Madame has cut its winter order by almost 70 per cent, focusing instead on using its existing unsold spring-summer inventory for the upcoming autumn-winter season in August. It will also liquidate stocks at a discount when sales resume.


"Of the entire order cycle, whatever we were holding for the summer, half has been shifted to August as autumn orders have been cancelled. The rest we will spike up with discounts and liquidate them," said Akhil Jain, executive director, Jain Amar Clothing, which manufactures and retails the Madame brand through 155 stores. Most retailers have been pushed to review budgeting and merchandising plans for the year.


Madame has also put on hold all expansion and renovation plans till March 31, 2021, as the cash-flow situation is tense, Jain said. Compared to the last fiscal, Jain said the firm has cut sales forecast by 35-40 per cent.

F2FMART

The specific advantages that the F2FMART offers to industry with its calibrated 'MOQ-based' personalised buying compared to liquidation or dumping:

•     Better working capital

•     Lower marketing and sales expenses

•     F2FMART: Marketplace for ready-to-sell and wholesale goods

F2FMART.com, a venture under the Fibre2Fashion umbrella, is an end-to-end vertically-focused e-marketplace covering the value chain from garment and textiles to fashion. It is a global B2B marketplace for ready-to-sell and wholesale goods that enables businesses to sell internationally, by enhancing their marketing efforts, sales processes and improving efficiencies.

"We provide innovative marketing tools that help textile and apparel manufacturing companies and Wholesalers, with ready to sell material, to reach the right buyers, at the right time and best price," says Adi Kapadia, head of e-commerce at Fibre2Fashion.

International sellers can build a virtual store on F2FMART for their ready-to-sell stock. The store is dynamically upgraded and its marketing is done online and through periodic virtual trade fairs organised on the Fibre2Fashion platform to receive exclusive buyers' inquiry.

"We offer real-time connection with personalised buying experience, covering our vast international database of online buyers, including enterprises, buying houses, design, product merchandising and sourcing agents. Plus, there is back-end support through online chat and F2F customer support team to solve queries and facilitate increased buyer-seller transactions," adds Kapadia.

The eight focused categories for ready-to-sell and wholesale goods on F2FMart are fabric and textiles, PPE for medical and civil use, apparel, outerwear, sportswear, home textiles, footwear and fashion accessories.

Textile and clothing manufacturers who have unsold inventory, excess production or order cancellations from brands or retailers, and have permission to resell in the geography, can take advantage of F2FMART-the global B2B marketplace for ready-to-sell and wholesale goods.

On F2FMART, companies can upload their product details, minimum order quantity (MOQ), and LIVE OFFERS. On their dashboard, sellers can see interested buyers for their products. It has features of automated reach-out through e-mail, SMS and push notifications to targeted buyers. Also included is the provision for live chat with buyers that ensures the right product attention from interested buyers in the shortest time.

Click here to join the fastest growing family at F2FMART-the global B2B marketplace for ready-to-sell and wholesale goods.

Footwear retailer Woodland said it will halt fresh collections for markets in India's south and west and use up stocks in stores right now. "Even if the lockdown opens, whether consumers will walk into stores-there is uncertainty. So there's no point making new merchandise. We will play with existing stock, adding a few more for the winter line which is mostly north-India centric," Harkirat Singh, managing director, Woodland, said. The retailer has put expansion plans on hold due to demand uncertainty.

Bestseller India that manages fashion brands like Vero Moda, Only, and Jack & Jones, has put on hold all expansion plans for the next six to nine months. The retailer's spring summer inventory will not be offered at deep discounts or liquidation as the weather conditions in India are very different to that of Europe and therefore, the company can carry forward its spring summer collection, according to Vineet Gautam, country head, Bestseller India.

Gautam said e-commerce as a platform will definitely get a head start once the lockdowns ease. "We already partner with majority of platforms. Those relationships are only getting stronger day by day," he said, but did not discount the ability of physical retail to bounce back gradually.

Madame's Jain said the retailer is anticipating a scenario where the share of online sales will get a huge fillip. "We will pass our unsold offline inventory online," he said.

Woodland's Singh also said the retailer will push online sales. "We are planning to launch a sale with our partners such as Amazon, Flipkart and Myntra as soon as lockdown eases," he added.

The Retailers Association of India (RAI), on several occasions, has alluded to the 'severe liquidity challenges' being faced by the retail industry that employs over 15 million people. RAI has been making desperate pleas to the government and landlords, seeking concessions in pay and rentals in a scenario where there is nil business.

As and when India emerges from the pandemic, a slump in economic activity will also have a deep bearing on discretionary spending for months to come, leading to significantly lower sales forecast. This, say analysts, is prompting retailers to reduce any expansion plans for the year.

"Retailers will relook at their store portfolio-wherever they see gestation periods are high, wherever they see they do not have the right rental model-they will either let go of stores or shrink square footage. Expansion looks very tough in the near term unless stronger players look at this as an opportune time to pick and renegotiate good real-estate, said Rachit Mathur, India leader, consumer and retail practice, at Boston Consulting Group.

Jain said Madame has shortlisted 12 stores that can be shut if demand fails to improve.

"Any expansions will be extremely tight and be stress-tested multiple times," said Amrish Kumar, managing director at fashion house Ritu Kumar. The retailer, which has more than 90 stores across brands, has also scaled back on orders for autumn-winter.