Price has never been more in focus in fashion.
But even as pandemic-driven consumer demand and global supply chain backups have pushed inflation to a 40-year high, apparel has been making only moderate gains compared with two years ago (and women’s apparel is even losing ground).
Brands have been crowing over their holiday results, with strong rebounds from last year and solid full-price sales that have them heralding an end to the promotional cycle and a new era of power brands.
However, the allure of cutting prices to drive sales — clearing inventory at the expense of profit only to start it all over again — is still there.
While some companies, including Ralph Lauren Corp. and Michael Kors, have used the pandemic to bolster their brands, others such as Walmart Inc. are using their financial might to fight inflation and keep prices down.
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Industrywide, the result is only moderate apparel pricing gains while the broader economy sees increases amounting to a three-alarm fire that the Federal Reserve plans to put out with a series of interest rate hikes.
Across the U.S. economy, January prices rose 7.5 percent from a year earlier — the biggest increase since Ronald Regan was president. Fashion rode that wave up, with apparel up 5.1 percent.
Comparing last month with January 2020, just before COVID-19 shut much of the world down, overall inflation is still extremely high, up 9 percent. But apparel prices were up just 2 percent.
Within that, men’s apparel prices gained 2.6 percent over the two years while women’s apparel prices fell 0.9 percent.
Fashion Inflation |
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The January apparel pricing picture is mixed when comparing current prices with right before the pandemic. |
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| One-year Change |
Two-year Change
|
|
| Apparel | 5.1% | 2.0% |
| Men’s Apparel | 6.6% | 2.6% |
| Women’s Apparel | 5.4% | -0.9% |
| All Items | 7.5% | 9.0% |
| Source: U.S. Bureau of Labor Statistics, seasonally adjusted prices. | ||
As the economy opens back up from the pandemic — which could happen this spring after a series of false starts — the mix could change and people might seek to replenish their work wardrobes. But they’ll be doing that just as policymakers try to cool things down.
Federal Reserve chairman Jerome Powell said recently: “While the drivers of higher inflation have been predominantly connected to the dislocations caused by the pandemic, price increases have spread to a broader range of goods and services. Wages have also risen briskly, and we are attentive to the risks that persistent real wage growth in excess of productivity [growth] could put upward pressure on inflation.”
But by and large, Powell said inflation is expected to decline over 2022 — a move that will likely be supported by higher interest rates.
“We expect it will soon be appropriate to raise the target range for the federal funds rate,” he said, a move that would make it more expensive for Wall Street investors to trade and for everyone else to pay credit card bills and buy homes and cars and fashion.
“Of course, the economic outlook remains highly uncertain,” Powell said. “Making appropriate monetary policy in this environment requires humility, recognizing that the economy evolves in unexpected ways. We’ll need to be nimble so that we can respond to the full range of plausible outcomes. With this in mind, we will remain attentive to risks, including the risk that high inflation is more persistent than expected.”
Meanwhile, Adobe has been tracking prices online and found while digital inflation has continued, apparel took a step back between January and December.
Adobe said overall online prices in January rose 2.7 percent from a year earlier and were up 1.1 percent from December.
Online apparel prices were up 15.8 percent year-over-year and down 1.7 percent from December.
“While price drops in categories like electronics and apparel have brought online inflation down slightly from the record high last November, consumers are still contending with elevated prices in the digital economy,” said Patrick Brown, vice president of growth marketing and insights at Adobe. “This is particularly notable in a category like groceries, where online prices continue to hit new records, while consumer demand for online grocery shopping remains heightened.”
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