By Casey Hall
SHANGHAI (Reuters) – Nearly a month after Shanghai lifted its strict COVID-19 lockdown measures, fashion stores are stuck with piles of unsold items as cautious consumers stay away from the mall’s dazzling grocery shopping districts.
Brakes to prevent the virus in Shanghai, China’s fashion capital, paralyzed the city of 25 million people in April and May, leaving presentations of good-looking clothing and products in retail stores and boxes of imported clothing blocked at the port intact.
The city’s reopening this month saw a flood of goods shipped from warehouses to store shelves already loaded with unsold goods two months of closure. Normally, about one-fifth of all imported goods entering China pass through the port of Shanghai.
Days after COVID-19 restrictions eased, gigantic “sale” symptoms set in in Shanghai, with stores from Lululemon to Victoria’s Secret offering discounts to attract shoppers.
Even online stores have struggled with an overabundance caused by blockages and interruptions at the source.
“We were very moved,” said Josh Gardner, founder and general manager of Chinese marketplace e-commerce partner Kung Fu Data, which manages the online retail outlets of 10 fashion brands, adding G-Star Raw.
“In April, May on the (major e-commerce platforms in China), there were no t-shirts to find, summer stocks ran out and everyone too, there are just no products,” he said. “Now everyone is bleeding and trapped with a large amount of stock that they can’t move. “
China is a major market for luxury goods corporations with sales reaching $74. 4 billion in 2021, according to Bain.
A consulting firm estimated that sales at the “618,” a major industry event in China from May 31 to June 20, at major e-commerce sites such as Tmall and JD (NASDAQ:JD) . com, were unchanged throughout the year. -year. year.
During the opening week of the event, small data showed that menswear sales fell by 22% and women’s clothing sales fell by 4%, although sportswear sales increased by 26%, likely due to an increased focus on fitness during the lockdown.
For now, some stores are stockpiling their stock and ordering less for the fourth quarter, when they will sell existing stock through Singles’ Day in November.
“For the apparel category, due to the epidemic and slow consumption, there is a peak of stock accumulation of spring collections,” JD. com general manager Lei Xu said after the online retailer’s first-quarter results. “As a result, many factories are skipping their . . . summer collections”.
Flash sales specialist OnTheList, which sells products for brands such as Versace, Jimmy Choo and Lanvin at discounts of 70% or more, reopened its physical showroom in Shanghai last weekend with a sale of Salvatore Ferragamo.
The high-end Italian fashion logo and almost each and every store in Shanghai closed their retail stores in April and May. Salvatore Ferragamo declined to comment.
Jean Liang, managing director of OnTheList China, said luxury brands are now more open to online sales as well as offline sales, while cosmetics brands proactively look to sales to eliminate excess inventory.
“Before, it was us who asked them what their plans were and now they attack us, which means they have inventories that they have to erase to have a healthy inventory situation,” he said. OnTheList’s flash sales calendar, which runs each and every few days, is already booked until September.
Shipping products for distribution in Europe or America is another solution, but lately it’s confusing due to rising shipping and air transportation costs, said Benny Wong, supply chain director for Peeba’s online wholesale market.
“Now, the main impediment is the transportation matrix. . . which creates a huge advantage for the owner of the stock,” he said. “Inventory can kill (and) some product categories have a lot of stock to move. “
SUSPICIOUS CONSUMERS
A few weeks after reopening, retail confidence is depressed, and Shanghai consumers have yet to return to malls in significant numbers and customer footfall is similar to before in major downtown malls, according to retail staff.
Shanghai’s citizens are reluctant to return to enclosed public spaces, largely for fear of being locked up again, as China’s damn ZERO COVID policies require it every time new infections emerge.
A continued ban on dining in restaurants also means that malls remain without their same food and drink attractions.
Across China, retail sales fell 6. 7 percent in May from a year earlier, extending last month’s 11. 1 percent drop as a slowdown in the world’s second-largest economy discouraged spending.
“In terms of stock settlement, there is rarely a very smart solution in China,” said Kung Fu Data’s Gardner. “I mean, what are you going to do that will rarely destroy your brand?”
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