Are pop-up stores the solution to winter storage?

In late 2021 and the first half of 2022, the main concern for big brands was finding enough clothes to sell. Demand in Europe surged while key manufacturing bases in Asia faced tight restrictions to cope with their Covid-19 surges. Today, however, the situation is very different: many of the big fashion brands – from Nike to H&M – are suffering from excess inventory, while inventory prices are skyrocketing and consumer budgets are getting tighter.

In fact, the effects of the war in Ukraine, historically high inflation and the spreading cost-of-living crisis have slowed demand since late spring 2022, so products are now piling up. To make matters worse, many industry players used 2021 with the boom in demand and low inventories as a starting point for 2022 and suffered from delivery delays. However, as a result, they have more inventory that is difficult to move. As a result, many retailers are already running aggressive promotions hoping to be in a better position again in the first quarter of 2024. In the UK, Asos, Boohoo and John Lewis are now offering strong autumn discounts.

Alternatives to the discount

The bleak economic outlook for the UK and Eurozone over the next 12 months will prompt consumers to focus more on value for money when making their purchases. However, the term “cheap” should not only be understood in the sense of low prices. In fact, European consumers are primarily looking for comfort, durability, quality and the perfect fit when buying clothing. As their budget for non-essentials becomes tighter and tighter, they will probably look for clothes to wear on different occasions. Companies and brands that are able to communicate the versatility of their collections should draw consumers’ attention to it.

In addition, the Euromonitor study “Voice of the Consumer: Lifestyles” underlines the importance of experiential shopping: 54 percent of European consumers prefer to shop in stores with special shopping experiences, and over 30 percent of those surveyed go to a store to to be inspired.

Thus, in addition to deep discounts that degrade a brand’s image, fashion companies could also consider other measures to clear their excess inventory and boost sales this winter, notably:

• Strategic partnerships with off-price retailers and outlet stores

By working with offline partners and outlet stores that offer a great experience for customers, such as Value Retail’s Bicester Village outside of London or La Vallée Village in the Paris region, suppliers across the luxury and premium as well as from the mid-price segment the opportunity to relocate their inventories and at the same time to increase their reach. This allows them to offer a positive experience equivalent to that of a flagship or department store to consumers who cannot afford their products at full price. They also have the opportunity to manage their unsold inventory in a sustainable manner and build a positive brand image. The Euromonitor study “Voice of the Consumer: Lifestyle 2022” has shown that around 40 percent of European consumers who earn more than 100,000 euros per year demand responsible and purposeful action from fashion brands.

• Use FOMO: flash sales and special prices

Platforms like Veepee, Brand Alley and Zalando Lounge create a sense of urgency and scarcity, allowing mid- and high-end brands to sell old goods without damaging their image. Since only registered customers can attend the events, the price differences between the different sales channels are not openly announced, preserving the chance to sell collections on other channels at full price. For mass manufacturers, platforms like Flashprice.co.uk can help sell stock piling up in stores and warehouses, making hunting for the best bargains fun. Such platforms also typically offer product bundles, allowing partner brands to mix and match fast-moving products with slower-moving ones, or mix older and newer products to give consumers the impression that they are getting more bang for their buck. This uses the popularity of certain items to sell others.

• Pop-up stores in the run-up to Christmas

In today’s tough economy, the oversupply of retail space and the widespread decline in commercial leases since the pandemic has given retailers and brands the opportunity to establish a physical presence in a store via a pop-up – and on a relatively small budget.

Brands and retailers should consider pop-up stores to get closer to suburban shoppers. In this way, they can meet the demand outside of the big cities, because new growth areas have emerged there in the course of the normalization of hybrid employment relationships. One example of this is Harrods’ H-Beauty concept stores, which have been opening across the UK since 2020. With many customers expected to start their 2022 Christmas shopping earlier to spread the cost, pop-up stores that address gift-buying alongside messages about self-love and self-improvement could be particularly effective. This could boost sales and reduce unwanted inventory. In the wake of the pandemic, more and more consumers are investing in their own health and admitting that they regularly treat themselves to little treats.