The Big Picture|
Inflation began to ease last month, coming in 7.7% higher than a year ago, as overall retail sales stayed positive. Sales were up 1.3% in October, thanks to increased consumption of food, drinks, and gasoline, according to the Census Bureau. Notably, spending has shifted from goods to experiences in recent months.
However, MasterCard SpendingPulse does predict that apparel gift sales will notch up 4.6% over last year. We believe that these purchases will still be connected with experiences, such as vacation wear and clothing for special events.|
For the overall holiday season, the National Retail Federation expects a 6% to 8% increase in sales over last year. But from what we have seen from Black Friday’s record $9.1 billion in online sales alone, much of the gains could be driven by discounts on popular items such as toys and electronics.
October Sales
Among our client base, October was the first month that sales softened in 18 months. Both menswear and women’s wear came in flat overall compared to last year. And while men’s special orders did see an uptick of 4%, special orders in women’s dropped by 2%.
In fact, menswear continues to have slightly more momentum overall, which is unusual compared to the normal sales cycle of women’s wear outpacing men’s, given that women tend to shop more frequently.
The numbers for November look similar to last month: a mixed bag with some clients showing gains and some showing small declines. What we know for sure is that there is an overall slowdown that could still lead to a shallow recession next year.
All Eyes On Inventory
With the sales cycle ebbing, it’s critical that you keep your eyes on your inventory levels to make sure that you are not stuck with excess goods come January 1st, when we think traffic may fall off dramatically. If your inventory levels start to exceed plan, adjust your markdowns accordingly.
That said, don’t get caught up in all of the promotional hype if your inventory levels look balanced. This is an uneven slowdown, and some operations are still doing well, especially if they have unique merchandise.
Another factor to consider is that even though the overall cycle is slowing you still need to make sure that you have enough inventory for Fall’ 23 because European vendors are being affected by supply chain issues due to high energy costs.
Many of our menswear merchants are going to market early – this week – to try to lock down orders. This doesn’t mean that you need to land the goods early, just that you need to make sure you have the merchandise.
Blacks’ Bottom Line
Keep your focus on your stock-to-sales ratio, since excess inventory could weigh down your results for 2023.
