Why re-commercing may be the new retail revolution
Excess inventory is not a new problem, but for retailers now, finding stock exit routes for SS20 collections is an absolute priority. It has changed from an accounting afterthought to a critical role in retail supply chains. Covid-19 has given the fashion industry the unique opportunity to entirely reset its value chains into more sustainable, efficient and shock-proof ways.
During the pandemic, retailers have also deferred stock and cancelled orders. A popular strategy is opting for out-of-character discounting to make up for lost sales. Although this may generate some short-term revenue, heavy discounting inevitably dilutes brand prestige. Unsold inventory also includes online returns. Returns are anticipated to rise as brands invest in online platforms and further lockdowns loom. Effective returns management including selling imperfect inventory will be an essential investment to cut costs, save time and retain customers. Brands typically sell to jobbers and discount retailers, but this can result in inventory spilling into core markets, cannibalising sales.
What happens to surplus stock?
According to the CEO of Parker Lane Group, Raffy Kassardijan, the issue of unsold stock is now a priority. “Covid-19 has shown that in the future, retailer security will depend on both sturdy contingency plans for unsold supply and alternative routes beyond major markets,” Kassardijan stated in an email to FashionUnited. The UK-based Parker Lane Group specializes in the management of goods returned by customers and works with Kiabi and Cache Cache brands. Founded in 2010, Parker Lane Group helps brands manage all their inventory-related problems under one roof.
Returns+ service suite
The company currently works with 50 partner brands (including NA-KD, Kiabi and Tendam Group) and is active across 60 markets worldwide. Parker Lane Groups’s offering is the Returns+ service suite, whose main strategy is re-commercing stock into secondary markets (selling on a wholesale basis to independent retailers and marketplaces). The suite also includes industry consultancy, returns management and in-house recycling facilities for items that cannot be resold.
Rekochet, PLG’s very own clothing outlet, is also launching in December 2020. “We are constantly updating our service offering to ensure we can always achieve the best prices for our partners,” explains Aleksandra Banasik, COO of Parker Lane Group. “This allows our partners to enjoy returns of over 30 percent revenue on unsold inventory compared to processing independently,” she added.
The Returns+ model was inspired by and designed for retailers’ needs: Parker Lane Groups’s in-house AI/ML platforms determine the optimum resale channel for each item. Items are then re-commerced in markets where they can achieve the highest possible value. Performance data is also shared with partner brands, allowing them to regularly assess product performance in the approved markets.
With this offering in place, re-commercing excess stock into secondary markets becomes the most commercially compelling solution. Rather than competing for lower prices as per the traditional buy-and-sell model, PLG works alongside brands to achieve the highest possible price.
Re-commercing, responsible consumerism and less recycling
Parker Lane Group’s successful re-commercing strategy is that they recycle less than 1 percent of the 3 million units processed every month (PLG only recycles end-of-life products that cannot be resold). Brands often view recycling and CSR as synonymous, when they are actually different conversations. For example, an old t-shirt cannot be recycled into a new one. It can be broken down to make seat filling or woven with virgin fibres to make partially recycled goods. Apart from being energy and resource intensive, recycling is also a paid-for service, incurring additional costs for retailers.
Re-commercing is also in line with consumer trends. Public antipathy towards wasteful business models was rising before the pandemic. Responsible consumerism, combined with retail spending grinding to a halt this year, has led to high demand for off-price and discount retail as well as second-hand goods. The challenges of the pandemic are only likely to continue. Brands will need to safeguard their supply chains from future shocks, as further outbreaks could be on the horizon. Parker Lane Group strives to provide industry expertise and a suite of dedicated services to help brands resolve age-old problems and adapt to the new world’s challenges.
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Photos: courtesy of Parker Lane Group