The Big Picture
While inflation and gas prices both came down over the last month, consumer spending was nearly flat in July. According to the U.S Commerce Department, retail sales were up just 0.7%, excluding the sales of gasoline and cars.
Still, this number was better than expected and some pundits are pointing to Amazon’s strong Prime Day sales as the driver. Online sales jumped 11.7% last month, indicating that demand in general is good, although online apparel sales have softened.
As we head further into fall all eyes are on inflation to see if price pressures continue to come down, providing some relief amid a slowing sales cycle. Meanwhile, the Conference Board predicts that U.S. GDP for 2022 will come in 1.3% higher than last year, but slow to an annual increase of 0.2% in 2023.
Like in the broader market, the sales trends slowed in July among our client stores. Menswear was up 4% overall, which was quite a drop from the 30% year-over-year increase we saw in June. Remarkably, Clothing categories such as suits and sport coats continue to be the strongest sellers.
In women’s, we saw a 2% increase, thanks to a bump in dresses.
The trends in both menswear and women’s wear point to spending around special events, and this pattern has continued into August. In fact, this month so far has been stronger than last month in our better apparel stores since customers have returned from their vacations and are back to picking up new pieces.
As we mentioned previously, inventory is starting to build and many of our merchants are introducing markdowns, starting at around 25% off. If your goods are starting to pile up, think about adding more items to your markdown pool. Since we don’t know exactly when consumers will start to tap the brakes on their spending, prepare yourself by taking some time to strengthen your vendor relationships.
You want easy and open communication so together you can navigate any potential changes in the sales trends. Both merchants and vendors need to be flexible as we come down from this extended period of demand. Pay your vendors on time and show them that you are a strong partner. This will no doubt help you later on.
One of the challenges we see ahead is that in addition to slowing sales, there’s not a lot of new and exciting fashion to get customers excited. In the high fashion realm designers are trending toward oversized looks, which just aren’t resonating with the average customer, who wants to look fit and attractive.
When it comes to footwear, sneakers are still leading sales, but we’re not seeing a lot of new brands in this space. Our salespeople are going to have to go the extra mile to create outfits that give a sense of newness to customers. Give them the tools and inspiration they need to make the sale.
Blacks Bottom Line
Your focus now should be on reinforcing the strength of your vendor relationships.