Even Without Vacations, We’re Spending on Fashion Again
(Bloomberg Opinion) -- Women are saying yes to the dress. The garment has become one emblem of the post-lockdown consumer, as economies slowly reopen in places like the U.S. and U.K.
And dressier clothing is just the start of what may be a “great rotation” in consumer spending. At the end of last year, we argued that a vaccine-driven economic recovery would shift what people buy — they’d order less leisure wear and buy fewer cushions, but put more money toward champagne, suits and experiences. In categories like fashion and cosmetics, this shift is indeed happening; however, other areas like dining, travel and big events have yet to really get going.
Until trips to offices and sunny climes pick up again, retailers and manufacturers will have to manage this sputtering recovery and deal with levels of demand that may be much more, or much less, than they expected.
Urban Outfitters Inc. was the first to signal the return to dressing up. It said that at its Anthropologie brand in the last week of February, seven of its 10 best-selling online items were dresses. Over the previous year, one or two dresses at most would have made the top 10.
When British retail reopened in June and December 2020, shoppers bought many of the same things they were ordering in lockdown — lots of leisurewear and lingerie. This time around, sales of womenswear — and particularly floaty, mid-length dresses — are up, as are handbags and mascara (yes to above-the-mask makeup). There’s far less interest in comfortable clothes made for lounging at home.
“Fashion is back,” declared Associated British Foods Plc, the owner of budget chain Primark. Clothing is undergoing its own metamorphosis: Skinny jeans, the workhorse of women’s wardrobes for more than a decade, are on their way out; mom jeans and other looser-cut pants are taking over. This is boosting denim sales, and should inspire sales of new tops and shoes to go with them.
A return to office life will also fuel more fashion spending. Winser London, which specializes in stylish workwear for women, is seeing demand for more fitted dresses increase as cities open up again. Menswear hasn’t picked up as much, but sales should revive as employers call workers back to headquarters.
While the rotation in clothing appears well underway, the picture is more complicated in other consumer sectors. In food, for example, restaurants are getting busier, but people are still cooking and ordering a lot at home.
Nestle SA says it’s seeing demand recover for products used in restaurants, especially in China; at the same time, its Nespresso coffee unit is still benefiting from remote workers being their own baristas. Rekki, a technology platform that connects independent restaurants with food suppliers, has also seen orders rise as the hospitality sector comes back.
Starbucks Corp. is starting to see recovery in sales at U.S. shops in dense, urban areas — the type that rely on office workers and tourists. But growth in its home market in the latest quarter was still powered by suburban locations and drive-thru windows, a sign that pandemic routines haven’t yet faded.
The home improvement category hasn’t changed much yet, but spending on renovations and other projects is expected to slow over time. Now that you’ve built a new shed and extended that loft, you probably won’t be repeating the process anytime soon. Some makeover projects envisioned in lockdown are still underway or awaiting an available contractor, but there will likely be fewer starting as vacations and sports tickets reclaim wallet share.
Holidays typically take a large chunk of the family budget. Right now, there’s a lot of uncertainty over international travel and fewer tourists are booking vacations abroad in sunny destinations such as Greece and Spain. (No wonder demand for swimwear is lagging fashion.) But if travel to and around Europe does resume this summer, it will unleash a torrent of spending. Unilever Plc says the performance of its European ice-cream business would be linked to whether people can visit beaches and tourist towns.
Being in the midst of these shifts means retailers and consumer goods groups must keep planning for uncertainty and remain flexible. Strategies will have to take into account the vastly different Covid experiences across regions. In the U.S. and Europe, for example, clothing and food retailers should be ready to increase their supply. In markets still ravaged by the virus, such as India, the emphasis will be on meeting the needs of people who need to isolate, stay at home and recover from the virus.
As the great post-pandemic shift in consumer habits inches along, the old adage that “retail is detail” has never been more appropriate.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.
Sarah Halzack is a Bloomberg Opinion columnist covering the consumer and retail industries. She was previously a national retail reporter for the Washington Post.
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