Retail

Shuttered Stores Slash Prices, But Consumers Aren't Spending

Stores Cut Prices, But Consumers Aren't Spending

Black Friday isn’t until Nov. 27, but clothing retailers, including Nordstrom, J.Crew, Macy's, Neiman Marcus and others, are offering deep discounts to unload tens of billions of dollars of unsold merchandise as the coronavirus keeps U.S. stores shuttered.

The Wall Street Journal reported that retailers are not waiting seven months to off-load the spring and summer collections.

“This is not like wine that gets better with age,” said Manny Chirico, CEO of Calvin Klein and Tommy Hilfiger parent PVH Corp., which also owns Van Heusen, IZOD, Arrow, Warner's, and Geoffrey Beene, on a conference call. “Your inventory gets worse.”

At nearly 9 percent, U.S. retail sales suffered the biggest one-month drop ever recorded compared to February, according to the U.S. Census Bureau.

CNBC recently reported Nike emailed its customers a 25 percent sitewide discount code. Macy's website boasts, “Relax, recharge & WFH,” or work from home. It is offering free shipping on purchases of $25, including beauty products. Such deals are typically reserved for its loyalty members. American Eagle's Aerie is offering free returns and providing shoppers 40 to 60 percent off underwear.

The WSJ report said Saks Fifth Avenue held a one-day sale last week with spring dresses at up to 70 percent off. Nordstrom is offering up to 40 percent off certain styles, J.Crew up to 60 percent off spring styles, and Gap has everything priced at 60 percent off.

“It’s Black Friday in April,” said Prashant Agrawal, CEO of Impact Analytics, WSJ reported.

Stores like Macy’s usually sell their unsold collections to off-price stores, such T.J. Maxx, which is owned by Framingham-based TJX Cos. That’s typically how large retailers recover the full cost of goods.

“No one is out there buying huge lots of inventory right now because everyone’s stores are closed,” said Adam Freede, CEO of MadaLuxe Group, a luxury distributor and retailer. “No one has a sense of the pricing because you don’t know where the floor will be.”

At least one expert told WSJ, the result won’t be pretty.

“It will be a bloodbath,” Cowen Inc. analyst John Kernan said. “There will be old inventory everywhere.”

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NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020 

The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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