With professional sports on hold, what about the related merchandise?

Brands face storage dilemmas and operational changes during the pandemic

Virtually all retailers are dealing with rapidly aging inventory during the coronavirus shutdown, figuring out what's in warehouses and stores and shifting labor and resources to ecommerce. For those that had planned to sell licensed sports merchandise tied to Spring 2020, it's been an especially bitter period.

Cancellation of the NCAA March Madness men's and women's basketball tournaments meant plenty of stores that count on fans buying team-branded apparel and gifts were left with massive overstocks. “Merchandise that can't be returned to the manufacturer is being scrutinized,” says retail consultant Carol Spieckerman.

“Products branded with '2020' are likely obsolete and have to be donated or sold at a deep discount,” she says. “Other items can be stored till next year, since the fans will likely come back when games return. If anything, that would mean some retailers will be ordering less merchandise from suppliers in 2021 since they'll be taking out stock from their storage.”

Coronavirus Resources

NRF is closely monitoring the COVID-19 pandemic. For updated information and guidance for retailers, check out our resource page. 

Putting plans on hold

Some teams had intended to roll out new logos for their upcoming seasons, which could make merchandise from this year obsolete — though that doesn't mean the old apparel can be tossed out. “The retro look is a big deal with older logos,” Spieckerman say, “plus some people won't like the new logo and will want shirts and hats with the old one.”

Product storage isn't usually a problem for medium- and large-size retailers that have the warehouse space to accommodate a temporary overstock, but smaller operations have needed to scramble for extra room. Like many minor league baseball clubs around the United States and Canada, the Asheville (N.C.) Tourists were fully stocked with team jerseys, caps, shirts and assorted merchandise they expected to sell during opening week. After the season was postponed, team president Brian DeWine brought home all of the unsold gear, storing it wherever it could go — including a bathtub.

Big teams have also been hit hard in the merchandise budget. Seattle's NHL expansion team, which is scheduled to take the ice in 2021, was hoping to announce the team name, logo and branding in March, leading up to a rollout of apparel in area stores. After the city was hit hard by the pandemic, though, the team changed plans and is waiting until the outlook is somewhat brighter for the launch.

Fanatics, which serves as the official retailer for all major U.S. sports leagues and has its footprint in nearly 1,000 outlets, has also taken a big hit. Executive chairman Michael Rubin says the company has seen online sales lag 30 to 40 percent below normal.

Pivoting to help

A fanatics worker wears mask and gown from jersey materials

In a flip-the-script move, Fanatics, which also makes jerseys for Major League Baseball teams, has kept its Pennsylvania apparel factory busy using all of its jersey material to make hospital gowns and masks for health care workers. So, techs wearing Yankee pinstripes could be at your next doctor's appointment.

Other sports apparel brands are doing similar work: Nike, Under Armour, New Balance and Bauer have all pivoted operations to support manufacturing essential items for health care workers.

“The great thing about what Fanatics is doing is they're staying on brand, while being helpful to the community at a time of need,” says Bob Amster, co-founder of Retail Technology Group. “Whether they make or lose money with making gowns and masks, they're getting plenty of goodwill now when people are looking for heroes. I'm sure it will pay off for them down the road.”

Retailers of NCAA-licensed apparel, especially those outlets in college towns, may have the most to lose. “College fans tend to be really passionate about their school and they'll often buy merchandise when their team is down,” says Ben Ball, senior vice president of Dechert-Hampe. “But when there's no sports and students aren't on campus? That's really uncharted territory. You've got to believe that when it's OK to play football and basketball again, there's going to be a huge pent-up demand for your team's gear. In that case, you'd want even more products in stock.”

Inevitably some stores will be left with too much of a team's merchandise when the season's start is months away. Marketers will likely turn to some old tricks: Mystery bags at a set price for a selected bundle of aged apparel can be a deal for shoppers and a way to move stock. Also BOGO 50 percent off  deals are efficient at clearing out warehouses. “In the grand scheme of things this is a temporary problem,” says Spieckerman. “Retailers will get through it by relying on the fundamentals they've always used to push through slowdowns in the marketplace.”

In partnership with the Council of Fashion Designers of America, NRF is urging capable retailers to begin producing masks to sell or donate immediately. For more information about designing and producing PPE products, click here. If your company has the capacity to assist with this public health crisis, FEMA has created a website with more information.


 

NRF is closely monitoring the COVID-19 pandemic, coordinating with government agencies, health experts and retailers as the situation continues to evolve. For updated information and guidance for retailers, check out our resource page. 

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