Rising inflation and looming recession fears have hit retailing hard. Chains such as Target Corp. and Walmart Inc., for example, are struggling with a glut of inventory as consumers change their tastes or cut back on spending. But in the middle of the maelstrom, there is a bright spot: fashion.
On both sides of the Atlantic, shoppers are shedding loungewear and opting for sleek dresses and blazers. Ralph Lauren Corp., Nordstrom Inc. and Macy’s Inc. all reported an increase in demand for dressier items. Rent the Runway Inc., the high-end clothing rental service, was one of the few consumer-focused companies this earnings season to beat estimates and raise its forecast as it saw more women hire bold outfits for special occasions.
“Black tie is until 2022 while sweatpants was until 2020,” Rent the Runway co-founder and chief executive Jennifer Hyman told analysts last week.
It’s a similar picture in Europe. Inditex SA, whose strength is in interpreting catwalk trends for mass audiences, saw its sales between May 1 and June 5 increase by 17% compared to the same period in 2021. So much for the giant of the fast-fashion Shein Group Ltd. who killed Zara. Indeed, more refined dressing tends to favor high-end retailers over cheap chic. It wouldn’t be surprising to see Prada SpA’s Gucci and Saint Laurent and Kering SA benefit when they report next month, as they generate 20-30% of apparel revenue, according to Bernstein.
The swing of the pendulum towards beautiful clothes also has a wider resonance. As silhouettes change, there’s a need for new footwear – think high heels rather than sneakers. Even the underwear is enhanced. “Appropriate clothing” needs more structured lingerie. This could provide an additional boost to Victoria’s Secret & Co.’s own recovery efforts. The retailer recently halted a period of declining market share in bras, with a marginal increase.
The main driving force behind this pivot is that events have returned with a vengeance. People socialize in the evenings and on weekends. Some 2.5 million weddings are expected to take place in the United States this year – the most since 1984, according to The Wedding Report. Add in parties and long-delayed vacations, and that’s a whole lot of new outfits.
Many people hadn’t bought formal wear in over two years. With so many shoppers restocking at the same time – and posting on TikTok and Instagram – it’s become a collective experience, creating the biggest fashion buzz since 1998, when Carrie Bradshaw strutted around in her knickerbocker pants at pinstripes in the original Sex and the City.
It helps that there are a lot of wearable trends going on right now. The dress’s popularity has been building for several years, but it now comes in a host of variations, including a comeback of the wrap style, which last enjoyed a burst of popularity a decade ago. Prints are also on display, and there’s myriad to choose from, whether you want flowing flowers or geometric patterns.
Bright colors have made a resounding comeback, perhaps reflecting our optimism about life post-pandemic. This works well for dresses, but also for matching tailored jackets and pants – another trend driving women’s fashion.
Men are not left out either. Menswear was the best performing category for Nordstrom in the first quarter of its current fiscal year. Even the costume shows new signs of life. UK stalwart Marks & Spencer Group Plc’s suit sales rose 39% in May from 2019 as its buyers bought outfits for the upcoming wedding season. Hugo Boss AG’s formal wear business is still below pre-pandemic levels, but is recovering, also reflecting the return to offices.
The big question now is: how long will the good times last?
Christmas should be another opportunity to shop for clothes, given that it’s usually the holiday season. This year could be even busier, following the disruption of omicron in December 2021. And the backlog of special events – The Wedding Report predicts 2.2 million more weddings in the United States in 2023 – means that there should have a tailwind next year as well.
But beyond that, the outlook is more uncertain.
The most affluent shoppers are leading the resurgence in clothing spending. They’re splurging on travel, another major driver of wardrobe refreshes. But they are not immune to external pressures. U.S. luxury is closely tied to stock market fortunes, and the S&P 500 entering a bear market on Monday, along with the sharp drop in cryptocurrencies, could undermine confidence at the high end.
Consumers also have more options for what they want to spend. The decline in interest in clothing over the past decade has coincided with an explosion of new technologies, restaurants and streaming services. While Instagram was first embraced by fashionistas, it also gave them competition as it featured travel, dining and beauty articles. Experiments will once again compete for a slice of people’s wallets, but it’s unclear if the next few years will see the same level of innovation. Otherwise, it could mean spending more on clothes, shoes and accessories.
A continuation of new fashion trends is also essential. After restocking their cupboards this year, consumers will need a boost to buy. Petah Marian, founder of consultancy Future Narrative, sees wellness fashion giving way to darker, sexier styles characterized by corsetry, sheers and leather as the mood shifts to party in a darker economic and geopolitical context. Miu Miu’s Micro Mini Skirt may be a taste of things to come. We’ll soon see if these looks sound as good to shoppers as the slew of accessible and timeless garments that have characterized this year.
After the misplaced bet on sweatpants forever, retailers need to beware of another wardrobe malfunction.
More from Bloomberg Opinion:
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• Gen Z, Gen Y and Gen X all agree on remote working: Chris Hughes
• Do computers have feelings? Don’t let Google alone decide: Parmy Olson
This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.
Andrea Felsted is a Bloomberg Opinion columnist covering consumer goods and the retail industry. Previously, she was a reporter for the Financial Times.
More stories like this are available at bloomberg.com/opinion