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What's coming when stores reopen? 'The mother of all clearance sales'

Samantha Christmann

Raincoats, spring sweaters and Easter bunny headbands have been sitting in dark, shuttered stores since Gov. Andrew M. Cuomo ordered malls to close March 19.

So what happens when stores reopen and all that out-of-season stuff is still in there?

"We're about to embark on the mother of all clearance sales," said Bob Phibbs, CEO of the Retail Doctor, a New York-based retail consultancy. "Every apparel retailer is in the same boat."

Not that months of quarantine are a worthy exchange for deep discounts on trench coats and T-shirts but, hey, silver lining?

When clothing retailers finally open, they are going to have an uphill battle. Despite stir-crazy consumers and pent-up demand, unemployment is at a near record high and a lot of people are broke. On top of that, customer traffic in stores is expected to be about a third of what it was before the shutdown, Phibbs said.

That means there is more stuff to get rid of and fewer people to buy it.

[Column: As malls close, it's the end of shopping as we know it ā€“ at least for now]

High supply, low demand. Stores will practically give stuff away.

And if that fails, they might just throw it away.

"I expect much of it to land in landfills," Phibbs said.

Before they resort to that, they will try to unload as much overstock as possible to third-party, cut-rate retailers such as TJ Maxx and Marshalls. "But there simply won't be enough places to put it," he said.

Stores will also do their best to sell spring inventory online, "where it won't stick out as much as Easter pastels might in store," Phibbs said. Some, like Gap, will put some inventory into storage ā€“ a bad move according to Phibbs, who says, "merchandise, like milk, doesn't get better with age."

Stores' access to credit is affected by how much inventory they are carrying. The more they have, the less new stock they are able to order.

Limited-run and exclusive collections will likely be the only items retailers will be able to sell at or near full price, Phibbs said. Jeans, lightweight materials and certain classic staples may also transition into summer.

As far as summer apparel, restocking will likely not be a priority, Phibbs said. China's factories are just now getting back to work, so summer apparel is harder to come by than usual. With so much discounted clothing on racks, full-priced summer will be a hard sell anyway.

Besides, will customers have the money to shop for clothes when stores reopen, even if prices are slashed to historic lows?

Unemployment hasn't been this bad since the Great Depression. Many workers in New York State haven't received the unemployment or federal stimulus checks promised to them when they lost their jobs as long as two months ago. Many have depleted their savings or borrowed money from family members just to survive.

And don't forget: Consumers who were able to defer mortgage and other payments may be on the hook for giant balloon payments when their forbearances end, whether they are back to work by then or not. If they are back to work, they could be making a lower wage than they were before the pandemic hit.

Even those who can afford to shop will likely spend carefully and stick to the necessities, according to the Nielsen Co., which tracks and analyzes consumer data.

"The real challenge is planning for fall and the fourth quarter, when limitations on store visitors are hoped to be gone and normalcy can return," Phibbs said.

It took a pandemic to make us appreciate brick-and-mortar shops

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