Even before the spread of COVID-19, 2020 hasn’t been a good year for brick-and-mortar retailers.
Macy’s shares have fallen almost 70 percent, Neiman Marcus recently declared bankruptcy, and Forty Five Ten’s future is uncertain. Stores across the nation were closed in March and April, and associates were laid off at unprecedented rates to cut costs. Despite promotions and new offerings like local pickup and delivery, retail sales dropped significantly. Fresh inventory, which had been ordered months before, continued to arrive. As a result, most retailers are currently sitting on thousands of dollars of unsold goods.
The average retailer sells 60 percent of its products at full price, and the remaining 40 percent (out-of-season, unpopular, or defective inventory) is liquidated in other ways. Some retailers rely on markdowns to move products, while others sell their goods to third-party discount retailers like TJ Maxx or Marshall’s. Many, especially luxury brands, opt to discard or destroy inventory that doesn’t sell. Fashion houses like Burberry, Louis Vuitton, and Chanel incinerate hundreds of millions of dollars of excess merchandise to prevent their products from being sold under retail pricing. Fast fashion isn’t much better–H&M has been criticized for cutting up and throwing away unsold clothing. Donating seems like an obvious solution, but some retailers argue that their brand equity is devalued when their products are available at thrift stores.
So, what’s a retailer to do?
Enter Dallas-based Gifting Brands, an innovative retail platform launched last month. Gifting Brands helps companies liquidate their excess inventory in an eco-friendly way without having to mark down their products, sell them to discount retailers, or donate them to thrift stores.
The process is simple: Gifting Brands invites apparel, accessories, and home décor brands to donate their products in exchange for a tax benefit. (Gifting Brands is a 501(c)(3) nonprofit.)
Gifting Brands then lists the donated products at a slight discount on its online platform.
All of the profits from each sale are then donated to local and national charities.
Gifting Brands was created by Jeannie Barsam, a Dallas retail veteran who once held leadership roles at Gap, Talbots, and Zales Jewelers. While at Zales, Barsam noted that there were limited options for inventory liquidation. This inspired the concept that would become Gifting Brands. In 2016, she left the corporate world and set out to create a business model that combined her passions for retail and philanthropy.
“Gifting Brands is a sustainable solution for excess inventory, but it also serves as an innovative way for brands to gain recognition and maintain brand integrity,” says Barsam. “Most importantly, it’s a way we can offer both brands and shoppers a way to be socially responsible.”
In 2020, Gifting Brands will support charities that are struggling financially due to COVID-19. The first recipient is The Family Place, a Dallas organization that empowers victims of family violence by providing safe housing and other resources.
“We need to be able to help every person who calls us, especially during this frightening time of confinement at home,” said Paige Flink, CEO of The Family Place. “The funding Gifting Brands provides will help save lives immediately.”
Barsam hopes that Gifting Brands will sell $2 to $3 million worth of donated inventory in the next year. So far, Gifting Brands has relationships with Tori Richard, R. Riveter, Talbots, Christy Jean, and Charles & Colvard.
“What you spend and how you spend matters, and we’re honored to share this opportunity with [consumers] to contribute to causes that [they] hold dear, simply by shopping,” says Suzanne Miglucci, Charles & Colvard’s President and CEO, of her company’s partnership with Gifting Brands.
Browse the current inventory at Gifting Brands here.
