Many fashion retailers are quickly establishing a multichannel sales approach—with a heavy emphasis toward online sales—while trying to maintain an even ratio of inventory to sales. That isn’t an easy task considering 1) online sales bring higher return rates (as customers expect hassle free returns and free shipping); 2) lower foot traffic in stores can lead to excess inventory woes; and 3) the Try Before You Buy business model is growing quickly and will further increase return rates.

A small amount of returns here and a few shelf pulls there can quickly pile up. Case in point: a certain apparel brand is currently dealing with $4.3 billion worth of unsold clothing after first reporting a drop in sales last year.

This build up of unsold clothes—measuring in the billions of dollars—does not happen overnight. The top three signals retailers look for include:

  1. An overall drop in brick and mortar quarterly sales.
  2. Decreased foot traffic in stores while online traffic increases.
  3. Unsold stock in the stores need to be replaced with newer, trendier clothes.

This third sign—selling trendy clothes before they go out of style—has become a major issue as many shoppers are now buying through their phones at many different stores and are increasingly concerned about quality. This leads to retailers looking for a means to mitigate the cost of overstock and return items.

Whether dealing with returns or overstock, apparel retailers cannot approach this inventory as an afterthought or think of it as a total loss. There are modern solutions available that can offset the costs of this previously unwanted merchandise.

Interested in learning more? Contact our team today.

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