THE CHEAT SHEET
A back to school shopping season like no other
- Schools hold one mix of virtual and personal lessons this fall, with details yet to be determined in many districts
- According to the National Retail Federation, US households will spend less on children’s clothing this summer than last year
- Brands introduced 46 percent less children’s clothing items between May and mid-July, according to Edited
It’s going to be a record back-to-school shopping season, but fashion will be left out of the party. Parents are expected to spend hundreds of dollars on laptops, tablets and other remote learning resources, according to the National Retail Federation. However, apparel is one of the few categories expected to decline, with an average spend of $ 234 compared to $ 240 in 2019, the NRF said. Brands saw this the coming months ago, but most had already ordered their back-to-school collections before the pandemic hit.
As with adults, brands are too rotatable marketing for comfortable clothes that are best suited for home schooling. They face a tough fight and attract buyers at all; a Piper Sandler study of American parents found a third plan to spend less on school clothes. The bank also predicts that parents will consolidate shopping to minimize shopping trips, which could mean buying more clothes at Walmart instead of the mall – or just shopping online.
It comes down to: Back to school is an important sales driver in itself, but this year it will also serve as a dry run for Black Friday. Brands are still working on their discount strategies and are figuring out how to turn in-store shopping holidays into physical-digital hybrid events.
Retailers are going to miss those stimulus checks
- U.S. state aid to those who lost their jobs during the pandemic ended on July 31
- Economists value the $ 600 a week checks to keep consumer spending from collapsing
- US unemployment data for July will be released on August 7; after early signs of recovery, the number of new unemployment claims has started to rise
The fashion industry’s trajectory for the rest of 2020 could be determined this week as Washington legislators negotiate a new round of economic stimulus. Retailers undoubtedly hope for targeted help. But the real differentiator will be how much money the government agrees to send to individual citizens. The stimulus checks of $ 1,200 and the unemployment assistance of $ 600 per week were essential to keep consumer-oriented companies alive in recent months. That money is gone and if Congress cannot agree on the next steps, many fear it bottom will fall out of the American economy. Even if the incentive is renewed at half its current level, retailers would see an additional 3 percent drop in August, according to Cowen.
It comes down to: For all the talk of strategic price cuts and new product lines, the fate of many fashion brands will ultimately be decided in Washington.
American Fashion gives a pandemic update
- Versace and Michael Kors-owner Capri Holdings, as well Ralph Lauren, this week’s quarterly financial results, covering the peak of the lockdowns
- The Ralph Lauren stock has fallen about 40 percent this year, while the Capri stock has fallen by 60 percent
- European luxury brands reported steeper than expected declines in sales and profit last week
The pandemic has not spared even the strongest luxury brands and has been particularly cruel to people with issues older than Covid-19. Ralph Lauren, Capri’s Michael Kors and Tapestrys Trainer and Kate Spade New York are all mid-turn and are trying to position their brands squarely in the luxury space and become less dependent on off-price channels and fading department stores. Neither of these labels was anywhere near where they needed to be when the lockdowns hit.
This week’s financial results likely reflect a brutal reality for brands that rely heavily on department stores and discount channels to drive sales. They will have to show that they can adapt their strategies to a changed shopping landscape, in which China and e-commerce are more important than ever. Their determination to pull back on rebates is also being tested as unsold spring inventory builds up. A Bernstein analysis of WGSN data found that at one point in June, 90 percent of the goods on Michael Kors’ website were for sale, and recently the average discount was 40 percent.
It comes down to: Executives will have to say this week that the outlook for American fashion is not as bleak as it may seem. There are bright spots for all of these brands, from strong e-commerce traffic to better-than-expected sales in newly reopened US stores (although some have since closed as new coronavirus cases increase).
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