How Stores Ended Up With So Many Clothes (Wrong)

Remember when we couldn’t get enough of our gym clothes or pajamas?

Now, the most interesting question for clothing retailers is whether they have an “inventory glut”—too many extra styles, sizes, and colors that don’t sell well.

Levi’s, for example, ended up with lots of jeans, Gap with lots of T-shirts and T-shirts, Kohl’s with fleeces and pajamas. Nike has cut shorts, T-shirts, and sandals, and Adidas and Under Armor have acknowledged their inventory issues, too.

“We’ve really seen it across the board,” says Brian Ehrig, partner in consumer practice at the consulting firm Kearney. “We’re talking tops, bottoms, sleepwear — all of those products are already seeing a major glut.”

It is a story of over-ordering, chaotic shipping, and constant pandemic changes in shopping habits. And it ends with full shelves, price cuts and promises of great holiday deals.

Retailers struggle to get their orders right

Any year, clothing stores do some tightrope actingAnd the Trying to predict trends and order goods months in advance. The pandemic has made that very difficult. First, in the blink of an eye, lockdowns have made millions of people trade their office clothes for sweatpants and home dresses. With shoppers stuck at home, malls emptied and overstuffed clothing chains filed for bankruptcy.

Then came the shopping boom. Retailers hit the throttle, ordering more and more. Then, the somewhat abrupt travel, in-person partying and return to the office meant that everything changed – again.

“A lot of the things people were wearing the last couple of years are not the same things they’re wearing now,” says Irig.

Through it all, shipments from Asia have seen a lot of disruption. Remember the delays and shortages of last winter? Keen to avoid any repeats, many stores decided not to risk their Christmas shopping order this year, placing such orders earlier than usual.

“No one wants to miss out on the holiday season, you really need this product,” says Christina Fernandez, senior research analyst at Telsey Advisory Group. “But you’ve got it now—and you’ve got a lot. So that’s the dilemma.”

For example, Nike CFO Matt Friend said the company has “a few seasons down the market at the same time” with late shipments for the spring, summer, and fall seasons arriving very late with holiday orders starting arriving early.

Not a necessity, the clothes have seen a price drop

Meanwhile, inflation is causing more shoppers to think long and hard about how much they’re willing to spend on clothes.

“It added to the confluence of events, retailers were late on some inventory, asking for (they didn’t) really need it, and then consumer demand slowed,” says Fernandez.

Target, Kohl’s and other retailers say rising food and gas prices are discouraging people from discretionary purchases — clothing is rarely considered a necessity.

Lower demand means less inflation: Prices for clothing have risen less than other goods, just 4% higher than a year ago, and have actually fallen over the past two months. Spending in clothing stores rose about 3% in October compared to a year ago, and is expected to decline during the holidays.

“I think what really caught the attention of retailers was the decline and change in consumer buying habits,” says Adam Davis, who works with department stores and other retailers as general manager at Wells Fargo.

Most companies, including Gap and J.Crew, have addressed their inventory concerns by cutting prices and making sales. Some are packing more evergreen items, like generic T-shirts that they may try to sell next year. Many of the clothes are also headed to discount chains like TJMaxx or Ross.

Does this mean extensive discounts for the holidays? Yes, most likely, Davis, Irig, and Fernandez all say. Will people decide they really want more clothes? That’s another thing entirely.

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