In the dog days of August, when there’s not much on the fashion calendar, let’s look at some reasons to be optimistic for fall.
1. The pandemic supply chain hangover is clearing up. The long logistical nightmare of fashion may be about to end. Shipping costs are falling along with fuel prices. The number of container ships waiting to drop off cargo at Los Angeles and Long Beach, California, the two busiest ports in the United States, has dropped to a dozen, from a high of 100 in January. It’s true that congestion is getting worse in Europe and the US East Coast, and a possible strike by West Coast dockworkers could once again cause global logistics chaos. But if the trend holds, it would be a game changer for retailers, who would be better able to predict when inventory will arrive and how much it will cost to get from factories to stores and warehouses.
2. E-commerce normalization is not bad. No one expected the pandemic online shopping boom to last forever, but the rapid return to the pre-Covid norm caught many in the industry by surprise. What tends to be forgotten is that the pre-pandemic trajectory, in which e-commerce captures a couple of percentage points more of consumer spending each year, rather than suddenly gobbling up the entire retail market, looked pretty good in 2019. Many retailers are also in a better position to take advantage of this more orderly transition. Digital brands have been forced to find the fastest path to profitability as investor funding has dried up and traditional retailers will have more time to adjust to a hybrid digital-physical future. Speaking of which…
3. We are in the midst of a renaissance for physical retail. Stores are the new hot investment for many brands, from emerging labels opening their first outposts to digital brands with ambitions to open hundreds of stores. Luxury brands like Gucci see more stores as the key to growth. Brands that are not ready or able to pursue a physical strategy on their own are entering wholesale partnerships to get their products in front of customers in the real world. Even department stores are finding new uses for spaces that once seemed like massive liabilities. There is already evidence that these efforts will pay off: Clothing store traffic was up 19 percent from a year earlier, when the Delta variant of Covid-19 was underway, and even up 4 percent from August. of 2019, according to Cowen. Expect to hear a lot about it when a slew of retailers report earnings this week: Urban Outfitters, Macy’s, and Nordstrom on August 23, with Farfetch, Affirm, Ulta Beauty, Coty, Victoria’s Secret, Abercrombie & Fitch, and Gap Inc. two days later. .
4. (Some of) the rebrands are working. J.Crew is back in the headlines for all the right reasons. Coach, Ralph Lauren and Michael Kors have succeeded in convincing consumers to varying degrees that it’s worth paying full price. Unlucky DTC brands are exiting ill-conceived side projects to focus on their core offerings. Gap’s Yeezy experiment still feels more like a distraction than a true rebound strategy, but the company’s long-suffering Banana Republic brand is showing signs of life. We’ll get updates on those two brands, plus Victoria’s Secret this week.
5. The travel bounce is real. Fashion executives must be delighted by all those news reports showing frustrated crowds crammed inside international airports. Many of those angry travelers are taking their first vacation in two years and spending accordingly once they finally reach their destination. Tourist numbers will drop along with temperatures, but it’s reassuring for brands worried that consumers will cut back on spending due to inflation or recession fears. The wild card, as always, is China: There’s no sign the country is ready to lift its ban on non-essential international travel, but the fashion industry is eagerly awaiting the windfall when it does.
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Source: www.businessoffashion.com