Never-out-of-Stock – German shoe manufacturer Lloyd predicts catch-up effect

Fashion items that are always available and for which there is always demand - this actually sounds like a pretty safe bet for the fashion industry. Unless an unexpected event like the Covid pandemic upsets this system. In this series, three brands from different segments reveal more about their NOOS system and what to do with it after the pandemic.

After FashionUnited spoke to a few womenswear brands, today we will talk about shoes. German shoe manufacturer Lloyd expects to have pent-up demand for formal and occasion shoes in the post-pandemic period and is arming itself for this with its extensive NOOS range. To be even closer to the market, the company also wants to introduce a new concept.

Even faster supply with Move program

Starting with the upcoming Spring/Summer 2022 collection, the shoe manufacturer will offer the stand-alone Move program, which is designed to guarantee fast restocking even for current season models. Lloyd had previously tested the system in its own retail network and with selected partners and has had consistently very good experiences. “Now we are also able to realize larger quantities in this form,” Lloyd CEO Andreas Schaller told FashionUnited via e-mail.

The program consists of 20 women's and 20 men's styles and is made up exclusively of current seasonal models that are available throughout. In contrast to the large quantities in the conventional NOOS range, the Move program is only stocked in the manufacturer's warehouse for a week. Repeat orders from stores are produced within a week and can then be delivered directly to the customer.

Unlike the NOOS concept, which can be used by any customer who reaches a certain number of seasonal pairs, Lloyd's Move customer must agree to generate weekly repeat orders for the items in question. According to Schaller, this is the only way to permanently extrapolate demand and ensure the profitability of production. The program is to be expanded in the following season, particularly in the womenswear segment.

“Provided that a Move article develops in such a way that pre-planning certainty is possible, it is conceivable that the article will be transferred to the NOOS program. However, it is also possible that such an article would be phased out at the end of the season,” explains the managing director. “Now it is a matter of gaining experience in order to secure the processes in such a way that they become scalable.”

NOOS generates significant revenue for Lloyd

The new Move program will be a stand-alone addition to the manufacturer's existing NOOS concept. The never-out-of-stock percentage at Lloyd’s is high. Before the Covid-19 crisis, the company had generated around 50 percent of its sales through the NOOS program. The seasonal men's shoe collection comprises around 170 styles, while the NOOS program also offers around 70 styles. For women's shoes, there are about 20 NOOS styles, which are available in addition to the seasonal collection of about 120 styles, and can always be reordered.

"First and foremost, we see the advantage for our specialist retailers, who can preserve their own liquidity by using our program. A service which is extremely important for them - especially at the moment," shares the head of Lloyd. "Of course, it is a big risk for us as a supplier to take on the merchandise risk of our specialty retailers. But we firmly believe that this will be even more important in the future due to retail financing structures."

Seasonally, about 40 percent of NOOS articles get renewed. In recent seasons, fashionable styles have increasingly been included in the never-out-of-stock program. "We have styles that have been in the NOOS program for ten years and that are still successful. On the other hand, there are those that are only in the NOOS program for one season and then drop out of the collection," said Schaller.

The collection’s pace is more sedate compared to the fast-paced NOOS model of apparel brands like Cecil and Street One, but Lloyd has also felt the effects of the Covid-19 pandemic. With brick-and-mortar store closures and falling demand for formal footwear, NOOS sales have plummeted. Are overstocked warehouses the result? “Fortunately, due to the high flexibility in our production process, we were able to quickly reduce or, in some cases, completely stop production. This has enabled us to prevent a massive buildup of inventory,” says Schaller.

Catch-up effect for formal shoes

After Lloyd had to close even its production facility in Germany in July due to the pandemic, the shoe manufacturer wants to show its colours further with the NOOS program.

The company believes that formal shoes and occasion footwear will be in greater demand again over the next few months as offices become busier and the celebration segment catches up. It said it wants to be prepared for this pent-up demand by offering NOOS and ramping up production quickly in this segment. “Nothing would be worse for our customers than to have to forego sales in the second half of the year because of a lack of shoes,” explains Schaller.

So far, the strategy seems to work: “We are already receiving reorders from markets that loosened their lockdown restrictions earlier than Germany and similar markets.”

This article was originally published on FashionUnited.de. Edited and translated by Simone Preuss.