"Excess stock is a killer of businesses.”
So says Talitha Becker, the director of Melbourne-based womenswear label Sass Clothing. Having launched the business in 1997 – and watched it storm across 500 retail doors in Australia and New Zealand, including department store giant David Jones – Becker has developed a cautious approach to inventory control.
Her company produces six Sass collections a year, operates a sister label titled Fate and is planning the release of a basics apparel line later this year. That’s a lot of SKUs, particularly at a time when retailers are launching premature sales in a bid to rid themselves of excess inventory.
“We do six indent ranges for Sass a year, so it’s out there every eight weeks,” Becker said. “But we’re actually carrying lighter stock than we did in 2009 because we learned from the global financial crisis to keep things tight.
“At the end of the day, there are customers who make indent orders and don’t pay for them when the stock arrives, but for the most part I would say we’re in a stronger position. It’s fast fashion, and we’ve learned to work well with in season repeats.”
On the department store front, Becker attributes competitive price points for Sass’s position as the number two youth brand at David Jones – “we’re well priced in a store that has a higher-end positioning” – while on the independent side, it’s having up to six sales agents on the road during the selling season.
“They meet with our clients directly, particularly in the country, and we build relationships that way,” Becker said. “If we have any extra styles, yes we’ll offer them a discount but we also think outside the box.
“We sent out this really beautifully designed e-newsletter, which allowed clients to purchase some of the [excess inventory] by clicking through a few really simple steps. It’s about making it as easy as possible.”
Rodeo Show founder Lisa Thai, who bolstered her stockist count from 70 to 100 in 2009/10 and has two stand-alone stores, has also taken a firmer hand with inventory levels post-GFC.
“We have less inventory this year as we were cautious with our ordering. Given the economic climate, we didn’t want to take any risks and followed the lead of our customers.
“In the past we found that more customers were more willing to reorder the same styles and repeat, however now a lot of customers are cautious and like to move on to new styles. Now our orders are kept very tight, sticking to indent orders and stock for our own retail stores and only punting an extra 10 per cent on winning styles.”
A majority of excess stock is shifted through warehouse sales – held twice a year in Sydney and Melbourne – where discounts of up to 50 to 70 per cent are offered. Consumer shopping event Fashion Weekend Sydney is also used as an inventory solution.
For Cooper St, which has 350 stockists nationally as well as distribution through department store Myer, warehouse sales are staged at its Sydney head office with up to 70 per cent off stock. The brand produces monthly collections and cleared January, February and March stock at its latest warehouse sale in June.
Director Craig Cooper said a two-year overhaul of the company’s infrastructure helped to alleviate any inventory woes this year.
“We don’t carry as much stock as opposed to previous years, due to the efficiency of the company now,” he said.
“[However] the seasonal change has made for a slight increase in stock inventory, as retail demand is slowing down due to the economic environment.”
Despite the challenges facing fashion wholesale businesses, IBISWorld predicts the clothing wholesale industry will grow consistently in the short to mid-term future. The business information firm forecasts that over the next five years, revenue in the Australian industry will grow at an average annual rate of 2.2 per cent a year to reach $6.85 billion in 2014/15.