Openbravo’s Good News in Retail This Week: April 21
This week, we look at what retailers are doing to ensure a progressive return to business. Retailers keep their inventory in transit, fashion sales increase in Italy, online sales break the record, augmented reality gains momentum, and retailers considers recycling overstock…
Can Retailers Cut Losses by Slowing Down Shipments?
Right now, fashion retailers could be facing up to £15bn in stock write-offs as a result of the coronavirus lockdown. Some retailers have turned to cancelling orders from suppliers, but another way to minimize their losses is by keeping inventory in transit a little longer.
In fact, shipping companies have been pushing to slow down more of their shipments because it saves money on fuel and reduces greenhouse gas emissions significantly. At the same time, slow steaming enables retailers to keep inventory from overflowing in their warehouses or having to pay for extra warehouse space. It also frees up space at origin factories and warehouses and avoid excess inventory at site, so that they can re-purpose the space as needed.
Maersk and Mediterranean Shipping Company, the world’s two largest ocean carriers, are both offering retailers the option to store unwanted shipments at cheaper locations around the globe until it is needed.
Promising Signs of Recovery in the Italian Fashion Sector
Reflecting rising consumer confidence, Italy’s important fashion and accessories sector has experienced a steady climb in orders of 18 percent and an increase in revenue of 13 percent since the end of March Among the fashion items seeing a wider global uplift right now are luxury goods such as handbags and trainers, along with gloves and sportswear.
As the world slowly emerges from the COVID-19 crisis, it is clear that many consumers will prefer to buy online, so a rise in online fashion orders in Italy is a clear sign of an improvement in consumer sentiment that will help all fashion retailers, not just e-tailers.
Record Jump in Online Sales Encourages Retailers to Expand Online
Non-store retail sales in the UK experienced a 125 percent increase in the week to April 12, the biggest year-on-year increase since 2010, according to the BDO High Street Sales Tracker, a well-followed indicator of consumer sentiment.
In fact, 20 luxury brands have taken this opportunity to open online shops on JD.com, a leading Chinese eCommerce platform, and have been able to sell up to 90 percent of their stock within a month. Even if it won’t make up for all the lost sales, customers are showing a willingness to buy online and retailers can no longer afford to see online channels as the competition.
More Online Shopping Makes Augmented Reality a Priority
Even without coronavirus, augmented reality has already proven to increase conversion rates and decrease decision-making time. Customers using AR technology will likely make better buying decisions, and ultimately, less returns.
Augmented reality, social commerce, and shoppable streaming were already around before this pandemic. Retailers that already have AR capabilities in place are better prepared because consumers can get a better visualization of how furniture, cosmetics, and other products look before they make their purchase.
As customers get more comfortable with using social commerce and augmented reality apps like Sephora’s Virtual Artist or IKEA’s Place, retailers have an extra incentive for using these technologies to deliver a better virtual shopping experience.
Fashion Recycling Could Offset Inventory Losses
Sustainability may not seem like a priority, but as fashion retailers are forced to slow down and re-think their supply chains in economic terms, now may be the best time to implement their sustainability plans.
Ultimately, the goal in the fashion industry is to ensure its materials come from sustainable or recycled sources and find ways to make sure they do not end up as waste. Uniqlo, for example, has renowned sustainability model where unsold items are either recycled into new clothing or donated.
As retailers are faced with large quantities of inventory that they may not be able to sell, retailers may find that using some of that excess inventory to make at least some of their new products is more cost-effective than using new materials. Moreover, strengthening this circular economy could deliver some of the resilience in supply chains that help the fashion sector become more sustainable for the long-term.