Year in Review: The Vaccine: The Great Enabler
Thanks to the vaccine in 2021, consumers were able to gradually return more comfortably to in-store shopping, live fashion shows resumed, and in-person trade exhibitions took place globally.
That is, until the last few weeks, when the Omicron variant has shaken people’s confidence once again and caused businesses to reevaluate their return to office plans; put a hold on any overseas or domestic travel through early next year — including during European fashion weeks, and increased fears that there could be a return to the shutdowns and cancellations seen in 2020. Health authorities have pushed for people to get a third shot of the vaccine, and masked mandates have returned for businesses and elsewhere.
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Still, the backlash against the vaccine became a story unto itself, retailers dug in their heels citing concerns over a labor shortage if vaccines were mandated.
In early 2021, people started getting their Moderna, Pfizer or Johnson & Johnson vaccines and retailers saw even more of what they called “revenge shopping,” where consumers, who hadn’t ventured far from their homes for over a year, started returning to stores rather than buying online as they had been doing since March 2020 when lockdowns began. Young people, in particular, were eager to go out again, and they started shopping for clothing to wear to restaurants, parties, weddings and nights out.
According to a survey of teens and twentysomethings in Piper Sandler’s 41st biannual “Taking Stock With Teens” report, there was a female-led spending recovery with upticks in spending on clothing, handbags and skin care in particular. Close to 30 percent of upper-income female teens’ wallets were going toward clothing, a number not seen since 2013.
In April, WWD reported that women who had gotten COVID-19 vaccinations were returning to specialty stores ready to spend on dressier clothing, according to retailers shopping the transeasonal shows at the Dallas Market Center and nearby Fashion Industry Gallery. “We’re starting to see customers coming in with friends,” said Cheryl Ross, vice president of product development for Soft Surroundings, which operates 80 stores, e-commerce and a catalogue.
In June, WWD reported that from revenge shopping to accelerated plans for travel on the horizon, a growing number of vaccinated consumers were gearing up to give retail strong months ahead. According to research by Pitney Bowes, U.S. consumers alone were set to increase spending by 9 percent in the summer compared to summer 2020, with Gen Z and Millennials, in particular, expected to spend about 15 percent more on average across all categories.
Jill Standish, senior managing director and head of global retail practice at Accenture, spoke in June about a significant uptick she saw in spending. “Data from several major financial institutions shows consumer spending up dramatically over the same period a year ago, when states ordered all but essential workers to stay home. The data also shows spending levels exceeding the same period in 2019, a year before the pandemic, an indication that consumers are both ready to spend their money and bullish on the future.
“There is evidence of pent-up demand in the apparel and footwear segment due to a large back-to-school projection as well as some form of returning-to-work for some. Lastly, leisure activities that have been shut down for over a year are starting to come back, as indicated by the opening of certain venues for concerts, sporting events and travel. This will spur the need for ancillary wardrobe updates that, again, are part of the pent-up demand,” she said.
Antony Karabus, chief executive officer of HRC Retail Advisory, felt the vaccines were contributing to customers feeling more comfortable shopping in stores.
“Given the strong progress made with vaccinations and more than 70 percent reduction in COVID-19 cases and deaths since peak, consumers are increasingly comfortable shopping in stores,” he said in June.
“With the U.S. likely back to normal life and routines — including travel, entertainment, restaurants — by the third quarter, we expect the pent-up consumer demand for apparel, accessories, footwear, home and other adjacent categories to produce an excellent second half of 2021 for retailers. The combined lingering effect of the stimulus payments, a large number of jobs to be filled and the trillions in savings amassed by U.S. consumers since the start of the pandemic will all augur well for retailers in the key second half of 2021,” said Karabus.
Throughout the summer as more and more people got vaccinated and COVID-19 cases declined, weddings and important events were rescheduled and capacity restrictions were lifted. As a result, the demand shot up for dressy clothes. Tuxedo shirts became scarce, and stores didn’t have enough fancy dresses since they couldn’t have anticipated the demand because they didn’t know when the vaccine would arrive.
In July, WWD reported that as millions across the U.S. vented about the pros and cons of vaccine and mask mandates, fashion organizations, retailers and store employees were equally divided about how to proceed as the Delta variant sent COVID-19 cases rising. While President Biden called on state and local government to offer $100 vaccine incentives, legislators in some states were seeking legal protections for people who weren’t vaccinated in the form of anti-discrimination laws.
As a major force in fueling the domestic economy, stores — large and small — had a lot to figure out in terms of keeping both their employees and shoppers healthy and happy. Walmart was urging employees to get vaccinated and doubled the incentive for associates to do so to $150.
As the largest private-sector employer, retail contributes $3.9 trillion to the annual U.S. gross domestic product. Retail supports one in four U.S. jobs, or 52 million Americans. While the debate about mask and vaccine mandates was often cited as a political one, a spot check of store employees in different states indicated that it was more a matter of personal choice. And many wanted the freedom to make that choice.
Meanwhile, after months of online-only gatherings, the trade show scene in London, France, Italy and the U.S., returned to live events, while starting in September, the return of IRL fashion weeks was a major turning point for the industry after over 18 months of COVID-19 and numerous digital fashion shows taking place over the past year. Fashion weeks in New York, London Milan and Paris had scores of live events and parties with extensive COVID-19 protocols in place.
But around that time, the Delta variant reared its head, which set off a new alarm.
Rodin Banica for WWD
Throughout the summer and into fall and the holiday shopping season, brands and retailers were plagued by supply chain and shipping delays due to the pandemic and increasing consumer demand. This led to inventory shortages and price increases. Retailers were encouraging customers to do their holiday shopping early.
While holiday shopping last year plummeted because of the pandemic, retail experts and forecasters predicted that the opposite would happen this year. The National Retail Federation predicted that 2021 holiday sales would grow between 8.5 and 10.5 percent from 2020, with overall sales between $843.4 billion and $859 billion. Online shopping was also expected to increase between 11 and 15 percent for a total of $218.3 billion to $226.2 billion.
Other reports indicated that the pandemic was largely not impacting consumers’ holiday spending plans this year as opposed to last year. A report from PWC showed that nearly 40 percent of respondents said the pandemic isn’t impacting their holiday spending and 30 percent said they were anticipating spending more this holiday season.
But in the midst of the pandemic and the attendant backups in the global supply chain, returning to normal — in any sense — is still a pretty squishy concept. Retailers, brands and consumers are all operating in unprecedented times and wrestling with widespread inflation, which hit a 39-year high in the U.S. last month.
In fashion, the inflation is most apparent online — the channel that has seen the strongest growth and also saw November apparel prices jump 17.3 percent compared with a year earlier, according to Adobe.
Overall, online prices rose 3.5 percent.
“This is the highest year-over-year increase since Adobe first began tracking the digital economy in 2014, and it marks the 18th consecutive month of year-over-year online inflation,” the software company said.
But even though many brands — Ralph Lauren and Michael Kors included — have been crowing about walking away from price promotions and moving prices higher, many are also still using price to draw shoppers.
“Fighting inflation is in our DNA,” Doug McMillon, CEO of Walmart Inc., told analysts. “Sam Walton loved that fight, and so do we.”
“Our cost inflation is higher than our retail inflation, and that’s what we would want,” McMillon said. “But we’ve got lots of flexibility as we monitor price gaps to decide what we do with general merchandise, what we do with apparel, for example, what we want to do with beef, with the inflation that’s happening there.”
For most apparel brands, broader inflation means higher costs as well as more competition as consumers pony up more for everyday items and staples.
Over the past two years, prices on all items were up 8.1 percent, while on men’s apparel prices were up 2 percent and women’s apparel was down 4.5 percent, according to the U.S. Bureau of Labor Statistics.
The push and pull in prices could have retailers and fashion brands fighting for margin all the more next year as the supply chain sorts itself out and keeps pressure on costs — and as the world waits to see whether Omicron will send the world into yet more lockdowns.
_ With contribution from Evan Clark
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