Daily Management Review

Warm Weather Challenges The Holiday Shopping Season As Heavy Winter Sweaters And Coats Pile Up In Stores


Warm Weather Challenges The Holiday Shopping Season As Heavy Winter Sweaters And Coats Pile Up In Stores
As the crucial holiday shopping season draws near, executives at big retailers like H&M claim that unseasonably warm autumn weather from the United States to Europe is hurting sales of bulky sweaters and coats. Some stores have already slashed prices to avoid having surplus inventory.
Over the past year, apparel retailers have worked to get rid of surplus inventory that had accumulated as a result of a change in customer demand from discretionary items like clothing to fundamentals.
However, because of the warm start to the fourth quarter, which is predicted by weather monitoring company Weather Trends International, retailers of winter clothing and accessories may find themselves overstocked by the end of the year.
Cos, an upscale division of H&M, has begun to offer a 20% off discount for knitwear and outerwear items including long puffer coats and merino wool sweaters. In light of the unusually warm weather, H&M CEO Helena Helmersson told Reuters on Wednesday that consumers are delaying purchases of 'heavy' autumnal clothing.
The arrival of its winter and autumn clothing inventory coincided with extended record-warm weather in its key Central and Eastern European markets, according to the European manufacturer Pepco Group.
"When it's 26 degrees (Celsius, 79 F) you don't tend to sell coats," Pepco's executive chairman, Andy Bond, told analysts on a call on Thursday.
The so-called Christmas shopping season has started earlier in recent years due to the numerous businesses' promotions and sales that run from October through December. In addition to Best Buy's 48-hour flash sale on October 10-11 and Target's "Deal of the Day" programme beginning in October, Amazon.com will host a second Prime Day on October 10-11.
According to Weather Trends International, temperatures in the United States might increase by 2 to 12 degrees Fahrenheit on average between October and December compared to the same time last year.
"The month from Black Friday to Christmas is much warmer than a year ago which will result in more excess inventory and steeper markdowns," said Bill Kirk, CEO and founder of Weather Trends International.
Costco Wholesale and discount shops like TJX, who are more likely to source their goods locally and can adjust to seasonal shift sooner, may benefit from this whereas businesses like Dick's Sporting Goods and Walmart are likely to be particularly impacted.
"If winter clothing doesn't sell well, that would be a problem for the industry this holiday season and if that turns out to be the case, then we may see a lot of discounting of that merchandise in the early part of 2024," Morningstar Research analyst David Swartz said.
Unfavourable weather typically becomes a significant issue for retailers because they order and ship goods for key seasons far in advance to make sure there are enough items on the shelves to satisfy client demand.
"The issue with most large volume retailers is that 75% to 85% of their manufacturing is dependent upon a very long development cycle ... so once heat or cold begins to affect the overall buying trends they would have already committed on those orders," said Robert Woods, founder of Vision Brands USA.
In an interview with Reuters, True Religion's chief marketing officer Kristen D'Arcy said: "What has been a pleasant surprise is continuing to see the short-sleeve T-shirts and the shorts continue to sell really well as a result of the warm weather."
"Our deepest buys for the season are not in outerwear, which would be the heavy jackets for the very, very cold weather but ... in active, which are lighter-weight tops and bottoms, denim of all different varieties ... then lighter-weight knits."
Additionally, Abercrombie & Fitch reported that buyers choose year-round clothing items and styles, leading to increased demand for "seasonless products" in the second quarter, notably in the men's category.
When stores try to stock apparel that is appropriate for the season but it doesn't sell, storing those products gets pricey.
When it comes to the sales outlook, according to Simon Wolfson, CEO of the British clothing retailer Next, "the difference that weather will make in December will be greater than the difference in how the consumer's feeling."