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The coronavirus pandemic has led to unprecedented decisions

Take Stock of Your Fashion Insurance Cover as Spring/Summer 2020 Proves an Unprecedented Season

May 2020

The coronavirus pandemic has led to unprecedented decisions within the retail sector that pushes the responsibility of stock back on to the supplier, rather than become that of the retailer. Amongst the areas that have been considered include longer payment terms, cancellation of orders and what to do with stock in progress but still at the supplier. The responsibility of who has the stock is the question. The retailers are pushing back towards the suppliers.

Next is just one of the many high street retailers who have not been able to sell their summer stock and need to re-assess their autumn/winter ranges because they are short of storage space[1]. Primark was quoted in April 2020 that their sales dropped from £650 million per month to zero, when it closed its doors, but they as all other retailers need to have stock in hand as well as preparing for the new, later, seasons. Without being able to “move stock” on the high street, the backlog builds all the way back down the supply chain.

The Retail Gazette suggests that stock is likely to pile up for many retailers.  As it notes, the trends of tomorrow are not those of today.  The public may well be in for an excess sales bonanza when doors do finally open; however, retailers who have invested in their online presence have done well in trading as people take advantage of their home time to “online-shop”. There are reports that Amazon’s founder Jeff Bezos considerable fortune has increased by $24 billion during this pandemic (The Guardian, 15 April, 2020)[2]. In contrast Primark has found itself honouring its purchase contracts, being ready to pay suppliers £370m for garments, despite already having stock to the value of £1.5 billion.[3]

Stuart McClure, of Love the Sales, predicts that retailers are likely to struggle to liquidate their stock.  Surplus stock could reach landfill, unless retailers discover ways to recover the value on their product.  Retailers may need to relieve pressures on their stock levels and try to repurpose stock throughout the seasons.  Discounting will have to be carefully managed.  Third-party retailers may be the beneficiaries of the massive, current stock holdings of leading retailers, whilst charities may also benefit due to the corporate social responsibility policies of retailers.

Whatever happens in the end, the likelihood is that retailers, large and small, have too much stock in their facilities, due to UK lockdown and nervousness about spending during the coronavirus epidemic.  Stock Values, Trade Credit, Goods in Transit, Perishable Goods Cover and even product recall insurances could all come into play as well as D&O cover as Directors must be seen to be managing the business or perhaps be open to a challenge from their shareholders.

In short, is the current coverage suitable or does it need increasing to cover these circumstances? There are many differing circumstances to consider:

Whilst stock deterioration in fashion is not quite the same as in the food sector, clothes going out of style, or being unsuitable for the season, need to be considered within any insurance conversation.  Anyone with an insurance policy covering their stock should discuss the situation with their broker.

Excess stock also implies additional storage and retailers are encouraged to check that the increase of goods is not creating additional health and safety issues in their warehouses.  They may also need to ensure their public liability, employer liability cover and engineering inspection cover is adequate and in place.

Spring/Summer 2020 may well become a “washout” and many collections will not sell to a public who are unable to go out to showcase their latest wardrobe.

There are many implications in these uncharted times and advice from your friendly insurance broker could help to protect you. They can assess what needs to be done to prevent financial loss.  To start a conversation, please source an expert by using our ‘Find a Local Broker’ tool.








Each applicable policy of insurance must be reviewed to determine the extent, if any, of coverage for COVID-19. Coverage may vary depending on the jurisdiction and circumstances. For global client programs it is critical to consider all local operations and how policies may or may not include COVID-19 coverage.

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