How to cope with the tons of fashion stock of the current season? Sebastian Rieder, founder of Berlin-based software start-up Betafashion, together with his partners and brand clients from the fashion/sports segment have developed a possible roadmap for industry and retail. Here are some thoughts and ideas:
1. The current situation:
- Too many s/s ’20 goods
- A/w goods already in production and down payments partly made
- Industry must already shoulder planned reorder quantities
- Retailers have no liquidity to cover costs for goods longterm due to missing revenue
Hence, a solidarity strategy is needed for this situation.
2. The global situation:
A delayed shutdown of all countries/regions is currently taking place.
3. Moving Forward:
There will be a delayed "ramp-up" phase (one country/region after the other). This means best chances to supply these regions with goods from day 1 in order to include all other regions bit by bit.
Demand-oriented delivery is now the main focus:
Sale of s/s ’20 goods only until June is not demand-oriented and the consumer should be enabled to buy them until midsummer.
After a lock-down, consumption will come back, but not with the down jacket in June/July!
4. Joint steps:
- Cancellation of existing customer orders:
A total pool of goods must be created that can be freely distributed by the brands. Brands need full access to all stocks of goods in order to control the best goods deliveries from day 1 of the ramp-up regions and thus achieve the best sales from day 1.
- Extension of sales according to demand of the s/s season until September/October.
- Sales period according to a/w demand from September/October to February/March.
Average industry delivery status for s/s goods – 75%.
In connection with:
- Invoicing of the delivered goods with 30-50% of the total invoice amount.
- Payment schedule for the remaining 50-70% after opening of the shops in 14-day intervals.
- Individual replenishment of the goods every 2-3 days.
- The value of the goods will continue to be paid off according to the agreed payment plan.
- Settlement of down payments with the first settlement cycle possible.
- Fast worst-/best-seller exchange is made possible.
Quantities from the merchandise-pool are allocated to the retailer according to their needs, which they have proven they can sell.
It is not worth holding back goods for a market that can reopen 2-4 weeks later:
- The sales period for these stores is even shorter and therefore the sales potential is lower.
- It is not certain whether the ordered goods can be sold there, but only then can it be determined.
- The longer the dealer is closed, the less goods he will need.
6. A/w goods:
Autumn/winter collection will be delivered in Sep/Oct:
- Initial delivery of 30% of the pre-order goods (invoice: 60 days for 50-70%).
- Only 30-50% down payment of the initial delivery or fixed amount before the first delivery (to be agreed individually).
- Payment plan for the remaining 50-70% in 14-day intervals.
- Individual follow-up of the goods every 2-3 days.
- The value of the goods will continue to be paid off according to the agreed payment plan.
- Settlement of down payments with the first settlement cycle possible.
7. Commtiment of retailer:
- Commits to purchase other quantities and possibly other styles than those ordered in advance (due to the merchandise-pool).
- Agrees to automatic replenishment by the manufacturer.
- Commits to the transmission of EDI data.
- Commits to the permanent optimization of data flows.
- Commits to the optimal and fastest possible handling of all returns (to enable resale).
- Accepts the postponement of the seasons.
- Retailers will bring all shipments on the floor as soon as possible.
- Will agree to the overall control of the shop - automatic replenishment.
- All agreements such as the end of season inventory/marketing participations/targeted margin etc. are cancelled.
- Commits to a "sales guarantee" of 50-90% of all deliveries of goods.
8. Prices:
- S/s goods are delivered with a discount of 10/20/30%, retailers are asked to pass this price directly to the customer.
- A/w: Regular pricing (no off-prices) from season start.
- It is about achieving the best possible sales and thus generating the best cash flow situation - it is NOT about profits.
Who does not participate gets his deliveries with a normal invoice.
The solidarity with each other in this situation also obliges every market participant to create the best possible conditions. It can only succeed together and therefore everyone must do their part together.
(Note of the editors: You can find the German version of the text on coviddrop.de)
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