Retailers are holding 2020 fashion for 2021 to avoid discounts

When fashion companies have too much unsold stock, they often use discounts to clear it out and make room for new clothes. It’s not always an ideal solution. Discounts squeeze profit margins, and too many promotions can leave shoppers reluctant to pay full price again.

So when large numbers of stores in several countries closed through spring due to Covid-19—and many shoppers paused spending on non-essentials—clothing retailers found themselves with a big problem. They had a season’s worth of unsold clothing, plus orders they had placed months earlier still arriving at their warehouses. To solve the problem many are expected to rely on discounts, but some companies are taking a different path, choosing instead to stash their unsold  inventory and try selling it next year once it’s in season again.

There are limits on what sort of stock can be redeployed in this manner. Generally it’s only basics, since they won’t become outdated as fashion’s trend cycle chugs inexorably along. Adidas and British retailer Next are both holding over such items,according to Reuters.

Ralph Lauren told investors in May that one benefit of its “classic timeless aesthetic is that many of our iconic styles resonate with consumers season-after-season.” The company said it would bump a portion of the clothing in its warehouses into future collections.

John Idol, CEO of Capri Holdings, which owns Michael Kors, Versace, and Jimmy Choo, was optimistic about Capri’s brands too, despite their leaning toward fashion rather than basics, and noted that retailers haven’t been holding as many sales as might have been expected. “Many of the fashion companies, including ourselves, really decided that the worst thing we could have possibly done is to have giant promotions,” he said.