How to Sell Clothes During a Supply Chain Crisis

Fashion’s supply chain problems are creating some unique challenges for the industry’s marketing departments: How do you convince shoppers they need last season’s clothes when they finally trickle into stores?

That’s the scenario facing Untuckit, which is counting the days its spring deliveries remain stuck in the congested Port of Los Angeles.

“It might take another two weeks and it doesn’t sound like a big deal — two weeks, three weeks, four weeks,” said Untuckit co-founder and chief executive Aaron Sanandres. “But if you think about a season, that’s three months, so that’s a third of the season that you’ve effectively cut off.”

Finding ways to move those out-of-season deliveries is a top priority for many brands. Big stockpiles of unsold clothes are a major drag on corporate balance sheets because those items will likely need to be marked down or destroyed. Abercrombie & Fitch shares plunged nearly 30 percent last month after the company reported inventories had spiked 45 percent from a year ago.

Red-hot brands like the shapewear label Skims can count on their customers to buy just about anything, even if it’s a collection of fleece pyjamas intended for the fall of 2020 that only began to arrive the following April.

“Because we are a young company, we are more agile. So we could more easily get through those,” said Jens Grede, who co-founded the brand with Kim Kardashian. “But … that was definitely hugely challenging to get fall/winter inventory as it was, you know, 70 degrees, 80 degrees in half the country.”

Others have to get creative to move mistimed deliveries before they wind up on the sales rack.

“To be late is disappointing because it was not your original plan, but start fresh,” said Sarah Engel, president of consultancy and digital agency January Digital. “What is exciting about this that either your new customers out there or even your loyal customers are going to get excited about? Focus in on that.”

Rebranding Delays

Ideally, the customer will never know an item is being stocked months late.

Delayed inventory can be framed as “much anticipated,” or “back by popular demand,” if it’s a restock, Engel said. Repeat customers can be pitched out-of-season items that complement an outfit they recently purchased.

“Look for inventory adjacencies or complimentary products,” she said. “Say ‘you loved ‘X’ item you’re going to love ‘Y’ item.”

Scarcity can also work to a brand’s advantage, even if sometimes the reason is a backlog of container ships in the Pacific Ocean rather than a carefully planned limited edition release.

When Untuckit received just 20 new styles instead of the 70 that were expected this spring, the company adopted a drop-style approach to marketing, sending emails to its customers highlighting the inventory it had, and then sent another message when the next ten styles arrived.

“What it actually does is it focuses the shopper’s buying behaviour on those 10 shirts,” Sanandres said. “There’s a silver lining, giving you more opportunity to connect with your customers.”

This strategy works best when a brand has a clear identity and a pre-existing connection with its customers.

“[Scarcity] … relies on the consumer to care,” said Katie Thomas, head of the Kearney Consumer Institute. “Just because you say all of the sudden it’s limited and fancy doesn’t mean that you suddenly charge more for it or that a consumer is going to be excited about it.”

Brands must also take steps to head off the inevitable disappointment when a customer goes looking for linen shirts and finds only fleeces.

The Untuckit shirts that were stuck in Los Angeles were scheduled to appear in marketing emails, imagery on its website and in catalogues, some of which had already been mailed out to customers, Sanandres said.

The brand could do little about those catalogues, but it took steps to mitigate the potential fallout by creating a landing page to prompt shoppers looking for the missing shirts to sign up for an email notification for when they arrived.

Sanandres said that the brand stockpiled two months’ worth of “evergreen” marketing emails — whose content could be sent out at any time and still make sense — to help the brand pivot when plans were further derailed.

Smart Pricing

In the end, discounting may be unavoidable.

Many retailers reduced markdowns during the pandemic, when factory closures, cancelled orders and shipping delays kept inventories lean. Now that clothes are piling up in stores and warehouses again, companies are gingerly re-introducing discounts, hoping limited sales will move out of season stockpiles without encouraging customers to expect permanent markdowns.

Macy’s executives, in the company’s first-quarter earnings call in May, said they have no plans to add more sales to the calendar beyond what’s already planned, even though inventories of some pandemic favourites are rising.

Macy’s chief financial officer Adrian Mitchell said the retailer is practising “dynamic pricing,” meaning it plans to change the timing, cadence and size of markdowns based on factors like available inventory and sell-throughs.

“We’re just being more surgical on the [promotions] that we do [have],” said Jeff Gennette, Macy’s chairman and CEO.