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Brand Protection in the World of Off-Price

Off-price sales channels enable businesses to shift unwanted stock quickly and with minimal fuss. But in the past, off-price sales channels have been seen as potentially detrimental to a brand’s reputation. Such concerns have caused some businesses to shy away from this otherwise attractive solution to drive working capital.

Reputation is key to success, so it goes without saying that all decisions made by businesses need to be done with protecting, if not strengthening, their brands. Fears over brand protection have understandably driven decisions over the use of off-price in business. However, if done thoughtfully, utilizing off-price does not have to come at the expense of brand identity.

High quality off-price retailers can be a powerful secret weapon to help companies through more difficult sales periods. Let’s take a closer look at how brand protection can be managed in harmony with off-price channels.

Excess inventory: the elephant in the room

Excess inventory is the driving force behind off-price retailers, yet it’s an elephant in the room for many businesses. Brands can be reluctant to admit that they have excess inventory at all, as they perceive competitors and consumers alike viewing the inventory problem as a sign of weakness. The truth is that even the most successful businesses will suffer from excess inventory at some point. But it doesn’t mean that a business is failing, or that consumers are deserting a brand in great numbers.

Excess inventory can be the result of many factors, some of which are entirely out of a company’s control. For instance, economic instability can lead to a slowing down in the purchasing of goods (particularly luxury goods), and consumer spending habits can change at any time. Likewise, brands can suffer from an unpredictable demand for products and find that they have overproduced certain items. Changes in weather are another big reason for excess inventory, which is certainly uncontrollable.

Reputation protection

The off-price industry has several different sales channels which brands can make use of, and each one with its own distinct advantages in relation to brand integrity. Primary channels include brick and mortar, flash sales and e-commerce platforms.

Brick and mortar selling channels offer excellent brand protection, as discoverability is lower and distribution is controlled. A flash sale on a membership platform will likewise offer limited discoverability, with products on sale for a brief period of time (2-3 days). E-commerce selling channels are another option, enabling brands to control the target market, so that products reach a specific audience.

There are many ways in which brand reputation can be protected while using off-price selling methods, and brands must first prioritize what is most important to them to better understand which approach works best for their off-price strategy.

A hidden opportunity

Many high-end luxury brands are guilty of destroying their excess inventory instead of selling them at reduced prices, in order to protect the perceived value of their products. In research published in 2017, the Ellen MacArthur Foundation reported that the fashion industry is responsible for creating greenhouse gas emissions of 1.2 billion tons per year, with much of this being the result of disposed excess inventory. This immensely wasteful behavior is still practiced despite changing attitudes towards sustainability in business. Consumers, particularly younger generations, are becoming more ethically and environmentally conscious than ever before. Therefore, it’s absolutely crucial that brands start to think differently about sustainability, and do all that they can to limit their effect on the environment.

Off-price selling is an excellent way of preserving brand reputation and promoting a brand’s commitment to sustainability. It prevents wasteful disposal, increases the use of products, and avoids unused products ending up burned or in landfill.

For those who can’t sell, there are still other sustainable ways to move excess inventory. A number of nonprofit organizations such as Delivering Good exist for this purpose, helping bridge the gap between retailers, manufacturers and individuals in need. Charities like this help retailers both operate more sustainably and donate excess inventory to people affected by poverty and tragedy.

Instead of hesitating to use off-price retailers over worries about brand reputation, businesses should feel comfortable embracing the opportunities that off-price presents. Off-price selling is sustainable, ethical, and environmentally aware. It’s an effective, fast way to rid businesses of excess inventory, and it can be done in different ways to best align with business priorities.

If you’re thinking about using off-price retailers for your business, talk to us about how it can be done, while keeping brand protection at the top of the agenda. At INTURN, we collaborate with our clients to fully understand the problems they each uniquely face. And then we help solve them. Taking all factors into consideration, we’ll alleviate your excess inventory issues, and keep your business moving. Get in touch if you’d like to find out more.