2019 has opened up with a wildly swinging US stock market, the uncertainty of the proposed tariff increases on Chinese-made goods, increasing rancor with the EU and other traditional trading partners, a partial government shutdown, and the mind-numbing prospect of a presidential campaign kicking into high gear.
Internationally, we have the Brexit debacle, France recovering from the edge of chaos, some very worrying right wing regimes in power across Europe and in now Brazil, and economic malaise in most countries not named the United States of America.
Despite all this the US economy is apparently motoring along at speeds not seen since before the crash of 2008.
For all the hype. the economy is doing nothing out of the ordinary.
You might be interested to know that according to tradingeconomics.com, the GDP Growth Rate in the United States averaged 3.22% from 1947 until 2018 [1]. The growth rate for 2018 will probably come in at right around that figure.
After the crash and recovery of the last 10 years, the current numbers do look shiny. According to Investopedia, retail is one of the sectors that is driving the economy. Excuse the cheap pun but I’m not buying it.
Friends and clients with bricks and mortar retail businesses tell me that they are not feeling significant benefits in proportion with some of the favorable numbers that we see reported each month. There is a disconnect between what should be available for household disposable income and what is actually being parted with.
How will this affect the apparel industry in general? I think it depends where you sit in the apparel supply chain which includes everything from the initial design to final disposal. If I had to choose one point on the product life cycle where I would not want to live, it would be as a bricks and mortar retailer.
In July last year, an article on retaildive.com reported that, “Online apparel sales accounted for 27.4% of overall U.S. apparel sales last year (2017), up from 23.5% in 2016 and 20.7% in 2015, according to the most recent Internet Retailer Online Apparel Report published last week.” [2]
Statista said this on the same metric, “Fashion e-commerce involves buying and selling fashion-related items online. In 2018, fashion e-commerce accounted for roughly 20.4 percent of the total fashion retail sales in the United States and has continued to experience a steady annual growth rate since 2003. In 2018, U.S. retail e-commerce revenue from the sale of fashion apparels, footwear and accessories amounted to an estimated 103 billion U.S. dollars and is projected to grow to almost 139 billion U.S. dollars by 2022.” [3]
Whether it is 20% or 27%, the percentage of online sales to total sales for apparel, is at least 10 points higher than the ratio of total online sales to total retail sales in the US, and the only way is up.
The whys, wherefores and which-ways for the bricks and mortar and/or online fashion retailer are for another blog. Suffice to say, that bricks and mortar retailers need a strong online presence (website, social media, etc.), need to be up on emerging practices such as omnichannel retailing, and need to be ready and willing to self-disrupt as the market continues to evolve. But again, more of this later.
We will get a close look at what the wholesale buyers think of the current state of affairs over the next six weeks as we move from the year’s opening trade shows of the year (Project Womens in New York and Active/Swim Collective in Anaheim) to LA Market Week then on to the release of Fall19 collections in Vegas next week and back to NYC for Coterie and the other NY Fall shows at the end of the month.
I was downtown LA for LA Market Week. It was quiet. Then again, January Market usually is. The rain didn’t help.
The better contemporary showcase Brand Assembly had good foot traffic. Brand Assembly is a first class, curated show that is always well supported by buyers.
Cooper Design Space
Active/Swim Collective in Anaheim in the first week of the New year for Day 2 had solid activity. Apparently Day 1 was busy.
Anaheim Convention Center
The yoga and active wear brand and past pbc client, Satva was showing at Active Collective. Puja Barar, the owner and designer of Satva has done a brilliant job in developing the label. Satva is now in 350 doors nationwide including Whole Foods.
This week saw the better men’s West Coast Trend Show once again take over four floors of the Embassy Suites LAX North hotel. West Coast Trend is a staple on the men’s contemporary trade show schedule. Activity was good.
The feedback from buyers and agents from the shows so far is typically inconsistent. One long time women’s contemporary retailer told me that business is flat despite the better economy. A sales agent who sells to specialty stores and the majors is happy with business after being very downbeat about sales when we talked six months ago.
McKinsey & Company have an excellent article on their website that looks ahead to the 2019 fashion industry landscape – The State of Fashion 2019: A year of awakening.
McKinsey believes that the fashion industry turned the corner last year and sees sustained growth in the industry for 2019.
With news articles, industry reports and anecdotal evidence generally trending positively, I expect next week’s trade shows in Las Vegas to be busy. It is too early to tell if this quick start to the year will continue. I am hoping very much that it does.
The industry and those that rely on its success have suffered a number of false dawns in the very difficult 10 years since the 2008 Great Recession. Many across the industry have worked very hard in the past decade to stay in business. Many haven’t made it. Sustained good times are deserved.
Paul Brindley
Principal Adviser
[1] United States GDP Growth Rate, https://tradingeconomics.com/united-states/gdp-growth, Web, January 15, 2019
[2] Howland, Daphne, 27% of apparel sales are now online, www.retaildive.com,
July 2, 2018, Web, January 15, 2019
[3] Fashion e-commerce in the United States – Statistics & Facts, statista.com, Web, January 15, 2019