After years of prioritizing casual over chic, fashion is back in fashion. But for how long?
The question is of more than sartorial importance. Many retailers mistakenly bet big on consumers continuing to slouch in their sweatpants; now they must decide whether the current revival of fancy dresses and smart suits is a post-pandemic flash in the pan, or heralds a renewed trend that will last a few more seasons.
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Rising inflation and looming recession fears have hit retail hard. Chains including Target Corp. and Walmart Inc., for example, are struggling with a glut of inventory as consumers have changed tastes or cut back. But amid the maelstrom, there is one bright spot: fashion.
On both sides of the Atlantic, shoppers are throwing off their loungewear and reaching for elegant dresses and blazers. Ralph Lauren Corp., Nordstrom Inc. and Macy’s Inc. have all reported an upswing in demand for dressier items. Rent the Runway Inc., the high-end clothing rental service, was one of the few consumer-facing companies this earnings season to beat estimates and raise its guidance, as it saw more women hiring bold outfits for special occasions.
“Black tie is to 2022 as sweat pants were to 2020,” Rent the Runway Co-founder and chief executive officer Jennifer Hyman told analysts last week.
It’s a similar picture in Europe. Inditex SA, whose strength is interpreting catwalk trends for a mass audience, saw sales between 1 May and 5 June increase 17% compared with the same period in 2021. So much for fast-fashion giant Shein Group Ltd. killing off Zara. Indeed, more refined dressing tends to favor premium retailers over cheap chic. It wouldn’t be surprising to see Prada SpA and Kering SA’s Gucci and Saint Laurent benefit when they report next month, as they generate 20%-30% of revenue from apparel, according to Bernstein.
The pendulum swing toward nice clothing has a broader resonance, too. As silhouettes change, there is a need for new shoes—think high heels rather than sneakers. Even underwear gets an uplift. “Proper clothes” need more structured lingerie. That might be giving Victoria’s Secret & Co.’s own turnaround efforts an extra boost. The retailer recently arrested a period of decline in its market share in bras, with a marginal increase.
The main force driving this pivot is that events have come back with a vengeance. People are socializing in the evenings and on weekends. Some 2.5 million weddings are expected to take place in the US this year—the most since 1984, according to The Wedding Report. Add in long-delayed parties and vacations, and that’s a lot of new get-ups.
Many people hadn’t bought formal outfits for more than two years. With so many shoppers restocking at once, and posting on TikTok and Instagram, it has become a collective experience, creating the biggest buzz about fashion since 1998, when Carrie Bradshaw strutted out in her pinstripe knickerbocker pants in the original Sex And The City.
It helps that there are lots of wearable trends right now. The popularity of the dress has been building for several years, but it now comes in an array of variations, including a return of the wrap style, which enjoyed its last bout of popularity a decade ago. Prints are also on display, and there’s a myriad to choose from, whether you want floaty florals or geometrics.
Bright colours have made a splashy comeback, perhaps reflecting our optimism about post-pandemic life. This works well for dresses, but also matching tailored jackets and trousers, another trend enlivening womenswear.
Men aren’t being left behind, either. Menswear was the best performing category for Nordstrom in the first quarter of its current fiscal year. Even the suit is showing renewed signs of life. British high street stalwart Marks & Spencer Group Plc’s suit sales rose 39% in May, compared with 2019, as its shoppers purchased outfits for the forthcoming wedding season. Hugo Boss AG’s formalwear business is still below pre-pandemic levels but is recovering, also reflecting the return to offices.
The big question now is: How long will the good times last?
Christmas should be another clothes-buying opportunity, given that it is typically party season. This year could be even busier, following the disruption from omicron in December 2021. And the backlog of special events—The Wedding Report predicts another 2.2 million weddings in the US in 2023—means there should be a tailwind into next year, too.
But beyond this, the outlook is more uncertain.
Wealthier shoppers are leading the resurgence in clothes spending. They’re splurging on travel, another major driver of wardrobe refreshment. But they are not immune from external pressures. US luxury is closely linked to the fortunes of the stock market, and the S&P 500 entering a bear market on Monday, as well as the sharp fall in cryptocurrencies, could sap high-end confidence.
Consumers also have more options for what to spend on. Declining interest in clothing over the last decade coincided with an explosion in new technology, restaurants and streaming services. While Instagram was initially embraced by fashionistas, it also gave them competition, as it showcased travel, dining and beauty items. Experiences will once again compete for a share of people’s wallets, but it is not clear whether the next few years will see the same level of innovation. If not, that could mean more spending on clothing, shoes and accessories.
A continuation of new fashion trends is essential too. After restocking their closets this year, consumers will need fresh impetus to buy. Petah Marian, founder of consultancy Future Narrative, sees feel-good fashion giving way to darker, sexier styles, characterized by corsetry, sheers and leather, as the mood shifts to one of partying amid a grimmer economic and geopolitical backdrop. Miu Miu’s micro mini-skirt may be a taste of things to come. We’ll soon see whether these looks chime as well with shoppers as the raft of accessible and ageless garments that have characterized this year.
After the misplaced bet on sweatpants forever, retailers should be wary of another wardrobe malfunction.
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Andrea Felsted is a Bloomberg Opinion columnist covering consumer goods and the retail industry. Previously, she was a reporter for the Financial Times.