Prana works to protect specialty retailers when faced with overstocks

When SNEWS® received a tip that the Burlington, Vermont TJ Maxx had several two way racks of Prana Impala shell shirts for sale, we sent our local correspondent to investigate. Indeed, she found at least two Prana styles in a rainbow of colors prominently displayed. But, as our reporter found out, TJ's is part of Prana's solution to protect specialty distribution when it comes to overstock.
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When SNEWS® received a tip that the Burlington, Vermont TJ Maxx had several two way racks of Prana Impala shell shirts for sale, we sent our local correspondent to investigate. Indeed, she found at least two Prana styles in a rainbow of colors prominently displayed.

Seeing Prana in TJ Maxx seemed a bit curious on the surface. Prana has gone out of its way to lay claim the pinnacle of high-end specialty retail with a no-closeout policy for dealers, and a major internal effort to maintain the mystery of the brand.

When we contacted Beaver Theodosakis, Prana's founder, for an explanation, he told us that, “Prana has 2400 SKUS. Nearly 40-percent of our orders are ASAP business. There are always leftover sizes and colors.”

Theodosakis went on to explain that while Prana used to be able to clear out its overstock with local factory sales, for the past year the company has decided to work with TJ Maxx in an effort to protect its distribution chain and its retailers.

“TJ Maxx is a first class and high quality outfit,” said Theodosakis. “They are the best choice out of the options, including outlets like Sierra Trading Post, which compete directly with our retailers. If we have problems with our product in any stores, TJ Maxx will pull the product within 24 hours. But most TJ Maxx shoppers are not our core customer. They're soccer moms.”

For the record, the Burlington, Vt. TJ Maxx is within five miles of at least three specialty dealers carrying the Prana brand. SNEWS® notified Prana about the Impala shells midweek, and by the weekend when we checked the store again the majority of Prana product was gone from the racks – though it was impossible to tell if TJ Maxx had pulled it or simply sold it.

“Despite the challenges of forecasting and speculation that all manufacturers face, less than two percent of Prana products end up as overstock at the end of the season,” said Theodosakis. “Most of this overstock is handled in our local factory sales two times a year."

"We've been up front with retailers like REI. When REI has asked us to take overstock back, we've let them know what was going to happen to it," added Theodosakis. "We've spent years researching the best solution to channel the remaining small percentage of leftover overstock from our factory sales to keep our inventory current, our brand identity in place, and our pricing integrity intact.”

We attempted to contact TJ Maxx officials for comment, and learned the company has an official policy that their spokespeople can't talk to trade publications. In checking around though, we did learn from another industry manufacturer that has sold to TJ Maxx in the past that TJ Maxx also buys non-closeouts, beating up manufacturers on price only moderately. Apparently, TJ Maxx purchases select products in sufficiently large quantities which the company then drops by ones and twos in TJ Maxx stores around the country to maintain the treasure-hunt atmosphere the store is known for.

SNEWS® View: Overstocks are a reality of business, especially the apparel business. Aside from TJ Maxx's idiotic policy of not talking to the trade – what on earth are they trying to hide we wonder? – there is no arguing that in many ways, TJ's is probably one of the best solutions for handling certain overstock situations – like with Prana. The company target market is outside the industry, a factor which is very important to Prana and should be much more important to other industry companies we feel. And TJ handles overstock of other comparable high-end brands, like Volcom. Prana deserves credit for seeking to find solutions to a problem that still protects its brand integrity and the pricing structure it has established with the company's retailers.

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