Ananya Mariam Rajesh
(Reuters) – Unseasonably warm autumn weather from the United States to Europe is denting sales of heavy sweaters and coats as the critical holiday shopping period approaches, executives at major retailers including H&M said, and some stores are already slashing prices to avoid piles of unsold inventory.
In the past year, clothing retailers have sought to clear excess stock that had piled up due to a shift in consumer demand to essentials from discretionary items like clothing.
But with fourth-quarter temperatures expected to start off warm, according to weather tracking firm Weather Trends International, stores carrying winter styles and gear could find themselves loaded with inventory at the end of the season.
H&M’s upmarket brand Cos has started to offer a 20% off sale online and in stores for knitwear and outerwear clothing including merino wool sweaters and long puffer coats. H&M CEO Helena Helmersson told Reuters on Wednesday that shoppers are putting off purchases of “heavy” autumnal items amid the warmer than usual weather.
European company Pepco Group also noted that the landing of its autumn and winter clothing inventory had coincided with persistent record-warm weather in its core Central and Eastern European markets. “When it’s 26 degrees (Celsius, 79 F) you don’t tend to sell coats,” Pepco’s executive chairman, Andy Bond, told analysts on a call on Thursday.
In the last couple of years, the so-called holiday shopping season has been starting as early as October as many retailers offer deals and discounts through the month and until December. Amazon.com is set to host a second Prime Day on Oct. 10-11, while Best Buy is offering 48-hour flash sale on Oct. 10-11 and Target is having “Deal of the Day” program from October.
In the United States, temperatures could rise by 2 to 12 degrees Fahrenheit on average in the October-December period compared with last year, according to Weather Trends International.
“The month from Black Friday to Christmas is much warmer than a year ago which will result in more excess inventory and steeper markdowns,” said Bill Kirk, CEO and founder of Weather Trends International.
This is likely to hit retailers from Walmart to Dick’s Sporting Goods in particular but could help out Costco Wholesale and off-price sellers like TJX which are likely to procure products locally and can adapt to seasonal change sooner.
“If winter clothing doesn’t sell well, that would be a problem for the industry this holiday season and if that turns out to be the case, then we may see a lot of discounting of that merchandise in the early part of 2024,” Morningstar Research analyst David Swartz said.
Unfavourable weather usually becomes a major problem for retailers as they place orders and ship items for important seasons far in advance to ensure enough products are on shelves to meet customer demand.
“The issue with most large volume retailers is that 75% to 85% of their manufacturing is dependent upon a very long development cycle … so once heat or cold begins to affect the overall buying trends they would have already committed on those orders,” said Robert Woods, founder of Vision Brands USA.
Kristen D’Arcy, chief marketing officer of apparel retailer True Religion, told Reuters in an interview, “What has been a pleasant surprise is continuing to see the short-sleeve T-shirts and the shorts continue to sell really well as a result of the warm weather.”
“Our deepest buys for the season are not in outerwear, which would be the heavy jackets for the very, very cold weather but … in active, which are lighter-weight tops and bottoms, denim of all different varieties … then lighter-weight knits.”
Abercrombie & Fitch also said there was strong demand for “seasonless products” in the second quarter, particularly in the men’s category, as customers picked out year-round clothing items and styles.
When retailers make an attempt to stock seasonally appropriate clothing and it does not sell, storage of such items becomes expensive.
Simon Wolfson, CEO of British clothing retailer Next, said that in terms of the sales outlook, “The difference that weather will make in December will be greater than the difference in how the consumer’s feeling.”
(Reporting by Ananya Mariam Rajesh in Bengaluru; Additional reporting by James Davey and Helen Reid in London; Editing by Matthew Lewis)
Inventory management is the process of ordering, storing, and using a company's inventory. It involves tracking stock levels, sales, and deliveries to ensure that the right amount of products is available.
Consumer behavior refers to the study of how individuals make decisions to spend their resources on consumption-related items. It encompasses the psychological, social, and emotional factors influencing purchasing decisions.
Retail trade involves the sale of goods and services to consumers for personal or household use. It includes various formats such as stores, online shops, and direct sales.
Economic growth is the increase in the production of goods and services in an economy over a period of time. It is typically measured by the growth rate of real Gross Domestic Product (GDP).
Markdown pricing is the reduction of the original selling price of a product. Retailers use markdowns to stimulate sales and reduce excess inventory.
Explore more articles in the Top Stories category
