Be prepared for fashion retailers to slash prices and entice customers with bargains when they reopen, following months-long closures aimed at slowing the spread of the COVID-19 global pandemic.
Analysts and retailers expect a flood of exceptional deals for products as retailers aim to liquidate old inventory and attract customers who have fallen out of the habit of visiting stores.
“There’s going to be sales like you’ve never seen,” DIG360 owner and retail analyst David Gray told Business in Vancouver.
“Customers will be getting 80%-off deals on all sorts of stuff. There’s going to be a product glut in the market.”
Gray envisions a “dog eat dog” world where retailers will do anything they can to get their customers back.
Retailers agree.
“It’s going to be a bloodbath,” said Army & Navy owner Jacqui Cohen, who shuttered her five stores on March 18.
Just before those closures, Cohen started stocking her store with spring fashions and other items that customers usually buy in the lead-up to summer.
It remains unclear exactly how long department stores and fashion retailers will remain closed but if it extends deep into summer, there will be a lot of products that will not be as much in demand as they would have been in early spring.
Cohen doubts many people will rush in to buy shorts and T-shirts because they likely already have drawers filled with those items. That will force retailers to discount even more in order to get rid of them.
B.C.’s provincial health officer, Bonnie Henry,has suggested that provincial parks could open up in mid-May, and discussions with the federal government to reopen federal parks soon are underway.
That excites Cohen because a big chunk of her business is outdoor gear such as camping and fishing equipment.
She has long targeted bargain-hunting shoppers, and she believes that this niche within retail will do relatively well.
The problem for her, however, is that in recent years more stores have made forays into the discount niche.
“Now everybody is in the discounting business, especially after this,” Cohen said. “Take the [Hudson’s] Bay [Co.} as an example – it’s a typical humongous store filled with merchandise. Whether it is sunglasses or bathing suits or t-shirts or shorts. They closed their doors suddenly, like Army & Navy did. What are they going to do with all their inventory? Everybody is going to be in my business.”
Online retailers such as Gilt Groupe, are already offering discounts that are more than 50% off, she said, adding that the most important metric to watch is the actual retail price, because some retailers mark up goods 200% before starting to calculate discounts.
Retail Insider Media owner and consultant Craig Patterson agreed that there will be bargains galore for shoppers, and that some of the products to be liquidated will be clothing with large logos for high-end fashion brands.
There will be less demand for those products because during a recession, people will not want to wear “flashy” brands.
Pre-pandemic, the fashion world was in a state of “logomania,” Patterson said. Large logos were emblazoned across T-shirts for brands such as Gucci, he said, adding that more discreet logos will start to become the norm.
He also thinks many retailers will simply not have the staying power to reopen their doors at all.
“This is a really, really bad time,” he said. “I think people know it but they also don’t realize how bad its going to be for years. It’s pretty incredible. We’re probably going to witness a collapse in the economy. We don’t know when things are going to be opening up again. When they do open, they’re not going to look like they did before.”
What would be worse is if fashion houses and department stores reopen this summer and then there is a second wave of COVID-19. That could prompt a new wave of closures.
“When you scare the public twice, they’re going to be twice as scared,” Patterson said. “It will put a good number of retailers in receivership and bankruptcy.”
@GlenKorstrom
