Stock market

With the effects of the cost-of-living crisis impacting at most income levels in the UK, the need to maximise savings for consumers and profits for retailers has never been greater.

Dealing with unsold and excess stock is a perennial problem for all retailers, no matter the price point or positioning of the brand. Retailers need to maximise profit, but also need to free up store and warehouse space for new season items. This has created opportunities for the likes of TK Maxx to purchase branded stock at reduced prices, augment with own brand or lower profile offerings, and create a `bargain hunt' proposition to drive interest and revenue.

TJX UK, which operates the TK Maxx and Homesense brands, recorded sales for 12 months to end of Jan 2022 of £3.3bn, gross profit of £492.3m and pre-tax profit of £14.4m. Whilst not all of the model is driven by the reselling of excess stock, it is a significant contributor. The figures show the scale of business unsold stock creates, quantifies consumer demand for out of season stock and shows retailers the profits that can be derived as a result. At the end of January, ASOS announced a new partnership with Secret Sales, the premium non-full price marketplace for fashion, to clear stock efficiently by selling up to 1,000 items from ASOS's own brands (e.g. Collusion, Topshop, and Miss Selfridge), and has recently announced its first pop-up physical shop to sell out-of-season sale items. Frasers Group bought MySale in 2022, an Australian-based company which enables Frasers to clear excess products through MySale's clearance channel.

This scale of demand, and the need to control the reputational impact of the selling of unsold stock on the brand in question – many brands do not wish to see their stock on jumbled racks or alongside lesser brands online – has led to the growth of the outlet industry. The success of the outlet model is clear, with over 30 outlets operating in the UK at present and further provision planned at the likes of Grantham and Scotch Corner. The success of Bicester Village (seen above), where the outlet model has been refined to house aspirational and luxury brands, attract consumers from across the globe and generates ‘the highest known sales per square foot of any shopping centre – full price or outlet – in the world’. Bicester Village shows the potential within the industry to think creatively regarding business model issues and deliver a compelling, profitable experience as a response. 

Just 30 miles from Bicester, in Eden Centre High Wycombe, charity Newlife is providing a compelling proposition to brands and consumers at the other end of the price scale. Newlife supports terminally ill and disabled children and their families, but rather than resell second-hand donations, they too sell excess stock, from brands such as Sainsbury’s Tu range at lower price points under one roof. Newlife's partnership with Sainsburys has been active since 2019, and Sainsbury's has donated 65.5 tons of unsellable clothing from their Tu range – which aligns with the Sainsbury’s sustainable strategy. River Island, New Look and Primark have worked with Newlife since 2010, whilst M&S donate their unsold stock to charities such as Oxfam and recycling organisations such as Wastesaver.

The routes to deal with excess stock whilst maximising profit and protecting/enhancing brand reputation are varied and likely to see further evolution, as the squeeze on customer spend and retailer margins persist. Through creative thinking and understanding in detail consumer wants and needs by place, they create a fascinating opportunity to evolve a brand’s proposition.

Hui Wen Lim