In the dog days of August, when there isn’t much on the fashion calendar, let’s look at some reasons to be optimistic about fall.
1. The pandemic supply chain hangover is clearing up. Fashion’s long logistical nightmare may be on its way to an end. Transportation costs are falling along with fuel prices. The number of container ships waiting to unload their cargo at Los Angeles and Long Beach, California, America’s two busiest ports, has dropped to about a dozen, from a peak of 100 in January. True, congestion is worsening in Europe and on the US East Coast, and a possible strike by West Coast port workers could throw global logistics back into chaos. But if the trend continues, it would be a game changer for retailers, who would be able to better predict when inventory will arrive and how much it will cost to get it from factories to stores and warehouses.
2. Normalization of e-commerce is not a bad thing. No one expected the pandemic online shopping boom to last forever, but the rapid return to the pre-Covid norm took many in the industry by surprise. What tends to be forgotten is that the pre-pandemic trajectory — where e-commerce grabs a few percentage points more of consumer spending each year, rather than suddenly swallowing the entire retail market whole — looked pretty good in 2019. Very Retailers are also in a better position to benefit from this smoother transition. Digital brands have been forced to find the fastest route to profitability as investor funding has dried up and traditional retailers will have more time to ease into a hybrid digital-physical future. By the way …
3. We are in the midst of a renaissance for physical retail. Stores are the hot new 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 unwilling or unable to pursue a brick-and-mortar strategy on their own are entering into 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 are paying off: traffic to clothing stores is up 19 percent from a year ago, when the Delta variant of Covid-19 was in high gear, and even 4 percent from August 2019, according to Cowen. Expect to hear a lot about that when a host 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) brand twists are working. J.Crew is making headlines again for all the right reasons. Coach, Ralph Lauren and Michael Kors have to varying degrees successfully convince consumers 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 comeback strategy, but the company’s long-suffering Banana Republic brand is showing signs of life. We’ll get updates on these two brands, plus Victoria’s Secret this week.
5. The return of travel is real. Fashion executives must love all those news reports describing frustrated crowds packed inside international airports. Many of those angry travelers are taking their first vacations in two years and are spending accordingly once they reach their destination. Tourist numbers will fall along with temperatures, but they are reassuring for brands worried that consumers will cut back on spending due to fears of inflation or recession. The wild card as always is China – there’s no indication that the country is ready to lift its ban on non-essential international travel, but the fashion industry is looking forward to the windfall when it does.
Next week wants to hear from you! Send tips, suggestions, complaints and compliments to brian.baskin@businessoffashion.com.
