In this edition of the Glossy+ Research Briefing, we examine upcoming Fourth of July sales discounts across clothing and beauty brands. Are major discounts at clothing retailers an indicator of struggling inventory overhang?
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Clothing brands heavily discount merchandise to offload seasonal inventory
Research questions: How do Fourth of July sales compare across brands? Do major retail brands like Nike have similar discount offerings to niche brands?
Answers from research:
Many retailers use the popular Fourth of July holiday to lure in customers on their day off, especially casual online shoppers who may need a summer wardrobe refresh or to stock up on essentials before Labor Day. This year will be no different, with clothing retailers that sell primarily online like Frame, M.M.LaFleur and Everlane offering heavy discounts of over 50% on select styles. Halfway through the year, this is an optimal time for these retailers to sell last-chance inventory and to reduce overhang.
Within the group of retailers examined, Glossy+ Research found that clothing, shoes and accessories brands are offering steeper discounts overall this year than beauty and health brands are offering. On average, the clothing, shoes and accessories brands had an average discount rate of 44%. In comparison, the beauty and health brands’ discounts averaged 25%. While beauty and health brands are offering competitive discounts for customers, they are not completely slashing prices like fashion brands. Rather than using the holiday as a time to offload excess products, beauty brands are using the sales period to reconnect with customers and to encourage repeat purchases.
However, some major clothing, shoes and accessories brands like Nike, along with some niche brands like lingerie manufacturer Cosabella and sock brand Comrad are offering similar discounts to the beauty and health brands Glossy examined. These types of clothing, shoes and accessories brands are not under the pressure of a changing weather season and a need to get rid of seasonal inventory. Customer demand for socks and intimate apparel remains steady throughout the spring/summer and fall/winter seasons, for example.
In the case of Nike, specifically, the company’s fourth-quarter fiscal 2024 earnings showed that inventory overhang was down 13% compared to the prior year. That was thanks to new footwear products the company brought to market and a push toward streamlining inventory during the prior nine months. Therefore, Nike doesn’t need to offer steep Fourth of July discounts to offload extra inventory before the fall/winter season approaches.
