A few reasons for the fashion industry to be optimistic

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In the dog days of August, if there is not much on the fashion calendar, let’s look at some reasons that lead to failure.

1. The pandemic is calling for a supply chain hang-up.. Fashion’s long logistical nightmare may be about to end. Shipping costs are falling along with fuel prices. The number of container ships waiting to unload at Los Angeles and Long Beach, California, America’s two busiest ports, has dropped to about a dozen from a peak of 100 in January. True, congestion is worsening in Europe and on the US East Coast, and a possible strike by West Coast dock workers could once again throw global logistics into chaos. But if the trend continues, it will be a game changer for retailers, who can better predict when goods will arrive and what they will spend from factories to stores and warehouses.

2. Normalization of e-commerce is not a bad thing. No one expected the pandemic’s online shopping boom to last forever, but its rapid return to the pre-Covid norm has surprised many in the industry. The pre-pandemic scenario that tends to be forgotten — where e-commerce was driving consumer spending that grew by two percentage points each year, rather than suddenly engulfing the entire retail market — looked good in 2019. So are many retailers. Better to take advantage of this more orderly transition. As investor funding dries up, digital brands are forced to seek the fastest route to profitability, and traditional retailers will have more time to ease into a hybrid digital-physical future. About which…

3. We are in the midst of a renaissance for physical retail. Stores are a new investment for many brands, from digital brands that want to open hundreds of stores to digital brands. Luxury brands like Gucci see more stores as a key to growth. Brands that aren’t ready or can’t pursue a brick-and-mortar strategy on their own are turning to wholesale partnerships to get their products in front of customers in the real world. Even department stores are finding new uses for open space that once seemed like a huge liability. There’s evidence that these efforts are paying off: Traffic at apparel stores is up 19 percent from a year ago, when the Covid-19 pandemic was in high gear, and up 4 percent since August 2019, according to Cowen. Expect to hear more from several retailers reporting earnings this week: Urban Outfitters, Macy’s and Nordstrom on August 23, followed by Farfetch, Affirm, Ulta Beauty, Coty, Victoria’s Secret, Abercrombie & Fitch and Gap Inc. two days later.

4. (Some) are doing brand rotations.. J.Crew is making headlines again for all the right reasons. Coach Ralph Lauren and Michael Kors have, to varying degrees, convinced consumers that they should pay full price. Down on their luck, DTC brands are releasing ill-conceived side projects to focus on their core offerings. Gap’s Yeezy experiment still seems like more of a distraction than a real revitalization strategy, but the company’s long-suffering Banana Republic brand is showing signs of life. We get updates on these two brands and Victoria’s Secret this week.

5. The restoration of the journey is real. Fashion execs must love all the news reports of angry people crammed into international airports. Many of these rabid travelers are taking their first vacation in two years, and will spend accordingly once they finally arrive at their destination. Tourist numbers drop with the temperature, but they are reassuring for brands worried that consumers will cut back on spending due to fears of inflation or recession. The wild card is, as always, China – there’s no indication the country is ready to lift its ban on non-essential international travel, but the fashion industry is looking forward to a windfall as it goes.

He wants to hear from you next week! Send tips, suggestions, complaints and compliments. brian.baskin@businessoffashion.com.

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