Apparel prices are riding the inflationary wave higher — and making up for last year’s declines — but it’s online where brands are making the biggest moves.
The pandemic brought a mix of supply chain backups, higher costs and a stay-closer-to-home consumer who was ready to spend, pushing inflation to a nearly 40-year high at the close of 2021.
Last month, the U.S. Consumer Price Index for all goods and services jumped 7 percent compared with a year earlier, according to the Labor Department.
That increase — the biggest jump since January 1982 — was fed by a 29.3 percent spike in energy costs and a 5.8 percent rise in apparel prices, among other increases.
Fashion prices, having fallen for many years amid the rise of big-box retailing and as globalization allowed for less expensive production, are still not at their high.
December apparel prices were up a much milder 1.6 percent from two years earlier, but are still below the levels logged for that month in the years from 2011 through 2016.
Apparel prices feed into the larger inflationary theme overtaking the economy, which has Federal Reserve chairman Jerome Powell squaring off with markets and maintaining that higher prices are a passing part of the pandemic. Powell has vowed to boost interest rates to keep the economy from overheating — taking away the punch bowl just as the party gets started, as the oft-repeated saying goes.
The broader picture is certainly important to fashion, if for no other reason than because consumers who are spending more for used cars or their gas bills don’t have as much money to shell out on updating their wardrobe.
But the inflation also comes as the industry moves to maintain prices and keep out of the promotional cycle that for years has had brands fighting for market share with bigger and bigger markdowns, but seeing smaller and smaller profit margins.
Many companies have made significant changes to try to create their own kind of inflation — selling more at full price and justifying those sales with better product and then avoiding promotions.
Carlos E. Alberini, chief executive officer of Guess Inc., told investors at the ICR conference this week: “The idea is that we are going to buy to the expected demand. So, by design, we’ll never have created significant excess inventory unless we are missing the judgment of how a product is going to sell in a very drastic way. But we are not buying to promote. And I think that that’s a major change to really be able to retrain that customer to really know that if they like the product, there’s a time to buy, because they will have to pay full price as opposed to seeing a stack of product in front of them and thinking, OK, if I come four weeks from now, this same product is going to be discounted by 30 percent.”
Fashion brands are also taking a more sophisticated approach to consumers online, where they can use data and AI to target shoppers and better sync-up buyers and inventory.
And that appears to be showing in pricing.
Adobe said on Wednesday that December online prices rose 3.1 percent from a year earlier — the 19th straight month of online inflation and led by fashion.
Apparel prices rose 16.6 percent last month, the ninth consecutive year-over-year gain for a category that, as Adobe noted, “typically sees consistent periods of deflation when seasonal discounts kick in.”
Fashion is big on trends and the biggest trend to watch this year might well not be in the silhouette, but the sales receipt.
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