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Store Closures Helped Carter’s Identify ‘Need-Based’ Demand

If there’s one uncertainty that apparel retailers have to come to terms with coming out of COVID-19, it’s that forecasting is going to be fluid no matter what. Given the volatility of the sector since the start of the pandemic, apparel companies can ill afford to rest on their laurels by planning their inventory based on data they gathered as recently as last week, and instead must continue to gather shopper insights on a day-to-day basis to make any sense of what the future might hold.

In a recent webinar hosted by the Institute of Business Forecasting & Planning (IBF) and sponsored by Logility and NGC, Steve Tribou, vice president of sales forecasting and planning at Carter’s, said that more than ever, the children’s wear and baby apparel retailer relies on point-of-sale data across channels to make forecast predictions and revisions.

This data can include information about repeat sales, time of sale, merchandise purchased and even geographic location and shopper demographics, and retailers can cluster it to see similarities and trends across markets.

“[Shopper] accounts can tell us what they think the trends will be in six months from now, and that’s kind of our buying horizon,” Tribou said during the webinar. “We see trends in the day-to-day, week-to-week point-of-sale data that can either contradict or support that over time. We point to it to reinforce what we’re trying to sell to that customer.”

Tribou divides the business’s product mix on two types of demand: need-based and want-based. While Tribou noted that it had always been difficult to quantify product needs and wants with consumers, the pandemic actually helped the retailer gain greater insight into the difference since its stores were closed and shoppers largely focused on buying essentials early on.

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“There was a lot of pent-up demand that was building when retailers shut their doors and we shut our doors,” said Tribou. “That need-based demand for consumers to buy kids’ clothing—kids are growing constantly—that need started to build up. Then after a few weeks, the e-commerce explosion happened as consumers were confident and they got over the initial shock of being at home, and that has continued throughout.”

Given that the COVID-19 pandemic has affected certain customers differently, Carter’s also has to balance how it plans across its different product mixes, which include “replenishment” items that can be ordered at any time, as well as items that need to be booked in advance.

In fact, Carter’s is packing away as much as $110 million of unshipped spring and summer product and holding it until next year, so the company feels it can give itself a cushion for the season when it comes around in 2021. At the same time, there are still plenty of goods the company wants to get to the consumer to get cash on an immediate sales and capitalize on a current fashion trend.

“There’s a seasonality to it,” Tribou said. “I took note of the ‘sell what you have’ mentality. There’s some of that going on because there was spring product and there’s fall product. There’s fabric weight that we have to take into account. While we’re not ‘perishable’ in a sense, we have perishable products to the consumer. It’s about staying close to our customers and trying to understand how they’re viewing the world. There are customers that we know are going to be ultra-conservative in spending. You don’t try to chase them. Everyone’s trying to chase the business right now.”

This not only applies to shoppers that visit the Carter’s site and brick-and-mortar stores, but also the retailers that the apparel brand sells to through wholesale, including Walmart, Amazon, Target, Macy’s and Kohl’s.

“We’re a big player in the [baby apparel] space and we have a lot of share, but how each of [our retail partners’] other vendors are reacting to the interruption of supply from Asia is important,” said Tribou. “You can argue that each of our customers is reacting differently. They might be shutting down their own private-label source goods and putting us ahead saying, ‘We have these orders with you. We’re going to continue to expect to receive them.’ We have another customer that wants to get out of Carter’s branded goods because they have all their private label coming in and they couldn’t cancel any factory shipments.”

While Carter’s retail sales in the U.S. decreased by 14.9 percent to $320.7 million, the wholesale segment fared better, falling 8.4 percent to $253.1 million. In the company’s first-quarter earnings report, Michael D. Casey, chairman and CEO of Carter’s, specifically pointed out Target and Walmart as essential retail partners that drove the benefit of shopping demand since their stores remained open throughout the pandemic.