Consumer demand for new wardrobes is encouraging stimulus checks and paint-up demand during epidemics. But supply chain barriers and recessions at major ports around the world have tightened the list of brands. This dynamic – the intense demand combined with the horrendous supply for clothing and accessories – brands are starting to pull back towards publicity and sell more of them at full price. For brands, this is a welcome reversal of the year offering steep discounts to entice buyers, a strategy that eats away at their profits and undermines their pricing ability.
Simon Siegel, a retail analyst at BMO Capital Markets, said he tracked traders who sold 2% fewer clothing items in the second quarter of this year than in the same period a year ago. Gap(GPS), Urban outfitters(URBN), American Eagle(This too), Under armor(United Arab Emirates) And Ralph Lauren(RL).
At an executive L brand(Pound), Owner of Victoria’s Secret and Bath and Body Work, said in May that the company had been able to “dramatically fall back on its promotional action” in its most recent quarter. An officer PVH(PVH)The parents of Calvin Klein and Tommy Hilfiger said, “Its profit margin has increased by about 10 percentage points in the last quarter compared to the previous year due to less promotional sales.”
“Higher demand is driving more price energy,” an American agglutination official said in May. The company noted a “significant decline in promotions” during its most recent quarter.
When the epidemic began last year and consumer demand suddenly stopped, brands initially feared it could stockpile unsold clothing that they would have to markdown to remove their shelves, Siegel said.
However, the worst case scenario of the brand did not work. Demand was cut, but most of the garment supply chain collapsed as factories closed. This helped brands avoid inventory glut on the Day of Judgment. Supply chains have resumed since then, but not fast enough to meet higher demand.
The National Retail Federation, an industry group, expects retail sales to grow between 10.5% and 13.5% this year to more than $ 4.44 trillion, more than double the previous forecast.
This did not match the supply and demand for the brands. This is the latest example of the post-vaccination economy after injuries to consumers ’pocketbooks. Car and house prices are suffering the same price imbalance.
“Once demand returned, it was simply not enough supply to meet, which created dramatic pullbacks in promotions,” Siegel said. Brands are accustomed to promoting their products extensively, it’s “once in a lifetime scene”.
Jefferies retail analyst Janine Sticher says supply chain delays will continue for the rest of 2021, making it more challenging for companies to make their lists.
That means consumers should expect less publicity than they used to for the rest of the year, he said, including the holiday shopping rush.