Warehouse overcrowded: high discounts on clothes, cars, furniture

Shops in Germany have been opening again for a few weeks.

Many shops have too much goods due to the weeks of closure and can probably only sell them with high discounts. However, the dealers have different requirements here.

High discounts could also be waiting for customers with new cars.

Finally shopping again? For a few weeks now, shops in Germany have been allowed to reopen in compliance with hygiene standards. But shopping with a mask does not seem to create a shopping atmosphere that inspires a great shopping frenzy. In many places, retailers therefore remain on their stocks in the spring collection. The next wave of seasonal goods is already on the way.

Many retailers therefore have no choice but to radically reduce their goods. This is how C&A does it, for example. A company spokesman told the “Handelsblatt”: “We can reduce our goods until they are sold”. Here, the dealer has an advantage over large brand groups – such as Adidas. The sporting goods manufacturer meanwhile stores stocks worth 4.3 million euros. That is an increase of around a third compared to the previous year.

The inhibited buying mood after the shops reopened was already evident in Austria, where the shops have been open since April 14th. Since then, sales there have been between 50 and 70 percent below plan, Peter Frank from the BBE retail consultancy told “In Germany, I also expect a 50 percent drop in retail sales in May,” he adds. According to the retail expert, German retailers should not look too enthusiastically at the reopening.

Every day the shops were closed during the Corona crisis, the spring goods were devalued. This is particularly bad for the fashion industry. In particular, transition goods such as jackets, knits, but also ready-to-wear fashion for occasions such as communion, confirmation, confirmation or weddings will probably hardly be in demand anymore, explains Frank. He says: “It is likely that there will be the first discounts in these areas. I suspect price reductions of 20 to 30 percent here. ”Travel needs are also currently unsalable, Martin Kerner from the outdoor store base camp in Karlsruhe told the“ Handelsblatt ”.

Merchants with goods that are considered timeless are a bit better off. For example, the Münster shoe chain Zumnorde. According to the “Handelsblatt”, the entire spring and summer collection is in the warehouse as committed capital. But the junior boss Thomas Zumnorde said confidently: “A welted shoe does not lose its value so quickly”. There will therefore be no major discounts here for the time being.

Some companies already advertise online with up to 70 percent discount on their clothing, accessories and shoes. Some retailers, such as Zumnorde, would meanwhile try to store suitable goods until next spring and then present them as new – for customers, but also for employees. According to Frank, the attitude of employees to the goods in particular is a sales-relevant criterion.

Experts expect discount battles

The retail expert already expected weeks ago that “at the latest when all shops have opened again, we will see extensive reductions, especially for spring goods.” Discount battles are quite conceivable. In addition, due to the change of season, the time for reductions to seasonal goods now comes anyway with a normal market trend.

Due to the unusual situation, however, there could now be high discounts that dealers would not otherwise make, according to Frank, just because some have to fight for survival.

Frank suspects that the strategies of the large chains will differ from those of smaller businesses. For example, Saturn and Media Markt have separate online shops on Ebay, through which they sell excess goods. “The small retailers, on the other hand, will increasingly rely on the solidarity of customers and messages, such as: ‘Please support us and buy from us even in times of crisis,” says Frank.

High discounts also for furniture and car dealerships

The fashion industry is particularly affected by the closings due to the high degree of seasonality and constantly changing trends. However, high discounts are currently also to be expected from other retailers, both online and offline. The luxury furniture retailer Who’s Perfect is currently advertising big in newspapers and online with a special discount of 25 percent on everything. The campaign calls the company “Italy says thank you!”, With which the Italian furniture manufacturers of the dealer want to thank the ad for the Corona rescue package of the EU.

According to various media reports, new cars are already piling up at car dealerships. This means a drop in prices, auto expert Ferdinand Dudenhöffer from the Institute for Customer Insight at the University of St. Gallen told the newspaper “Autobild”: “For some models, there will be a 50 percent discount,” he expects.

Although many dealers and shops across different industries have tried to cancel their orders from manufacturers, the Aprilware has now mostly been delivered and cancellations from manufacturers have hardly been accepted, explains Peter Frank. “So there will definitely be too much goods on the market,” he says. This “old” goods take up the space of new, already ordered goods, because warehouses and distribution centers have only limited capacities. So the goods have to get out, whatever the cost.

Experts expect a low buying mood

At the same time, experts as well as the retail consultancy BBE assume that the buying mood will not suddenly be the same as it used to be. After all, Corona is far from over and measures such as wearing a face mask, keeping a distance or constant hand disinfection do not exactly ensure a carefree shopping experience.

Therefore, retailers now have to get creative quickly to encourage customers to buy. Discounts could help. Nonetheless, no retailer can actually afford big discounts. To survive, however, some will have no choice.


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