Woman in the spring

Fashion Has Three Trends Driving New Consumer Demand

The movie The Perfect Storm illustrated the devastating effects when three weather systems converge to become a monster mega-storm. Right now three trends are converging that could have quite the opposite effect on fashion retail–a perfect optimum that will drive new demand for fashion.

The trends–tax refunds that put more money in consumers’ pockets, Marie Kondo’s call for people to clean out their closet clutter, thus making room to buy new things that bring joy, and an early spring and late Easter–will give a much needed boost to fashion retail. And heaven knows, fashion retail needs it.

In a retail market that grew 5.3% last year, excluding motor vehicle and parts dealers, clothing retailers underperformed, advancing only 4.3%, and department stores, heavily dependent upon apparel sales, did even worse, down -.9%.

Tax refunds are bigger this year than last

Tax refunds are an annual rite of passage. The National Retail Federation reports that nearly two-thirds of Americans (65%) expect a tax refund in 2019 and some 39% of those with incomes over $50,000 expect a bigger refund this year than last.

The Treasury Department confirms that through the first four weeks of the filing season the average tax refund was $3,143, up 1.3% over last year. However, the tax refund windfall is likely to come later this year as only 49.9 million returns have been received so far, as compared with 51.7 million in 2018, a 3.5% decrease.

While the NRF survey found saving that refund and paying down debt are what the greatest share of those getting refunds plan, what people say they will do is not always what they actually do. Those good intentions may go by the wayside given the other two trends.

Marie Kondo’s KonMari philosophy is a cultural phenomenon

Since the 2014 publication of her book, The Life-Changing Magic of Tidying UpMarie Kondo is bringing order to chaos in American homes. To help people get rid of materialistic baggage that is dragging them down, she introduced a principle called KonMari, guiding people to keep things that “spark joy.”

Now with 2.8 million Instagram followers and a new eight-episode series called Tidying Up with Marie Kondo on Netflix, her approach to wardrobe decluttering and reorganization is attracting new adherents daily and giving a boon to resale shop’s inventory.

Kondo has tapped a pressing need. An international survey conducted last year by relocation company Movinga found that 82% of the items in American’s wardrobes go unworn. Only Belgium’s closets have more clutter.

I know looking at my two big closets, if I rid myself of clothes I don’t wear, don’t fit or don’t really like, my hoard would easily be reduced by two-thirds. Clearing out my closets would give me an immediate feeling of joy, no doubt. But not long afterwards, my mood would change, as my empty closets cry out for filling with new, more stylish items. After a couple of shopping trips, my joy would be restored.

That I think will be the ultimate Kondo effect–a demand to replace some, if not all, discarded clothing.

We are Americans with a lifetime of acquisitive habits that are hard to break. We find joy in consuming and American’s newly decluttered, reorganized closets will require we fill those empty spaces with a few carefully-selected items. Those new purchases will bring renewed joy as spring blossoms.

A warm spring and late Easter will bring more people out to shop

The Weather Company just released its spring forecast, and Paul Walsh, IBM’s global director for consumer strategy, says it couldn’t be better for fashion retail. After a particularly late winter, spring will come early this year with milder weather than last. It will supply a favorable tailwind to fashion retail.

While fashion retailers think in terms of seasons, consumers react to weather. “Now a days, we don’t buy based on the calendar; we buy based on how we feel. For seasonal apparel, the switch is turned on when it feels like spring,” Walsh told me. “Only then do we look into our closets and say it is time to update.”

It’s what Walsh calls the “cabin-fever effect.” Last year it happened quite late as spring didn’t really turn until late April and early May. Combined with an earlier than usual Easter last year, people didn’t feel like it was time to refresh their wardrobes until much later in the year.

This year will be different, as a late Easter, April 21, will give a longer runway to sell spring and summer fashions. “When it starts to feel like spring, we will see an extra amount of demand,” Walsh predicts, which should start to happen next week.

Given the differences in last year’s and this year’s spring, he sees retailers will benefit from good weather-driven comps. “Our predictions show that it will be a warmer than normal April,” he says, noting that The Weather Company is a subsidiary of IBM.

This, however, could challenge retailers that may not be ready to meet increased demand for spring apparel. “Most retailers plan their upcoming seasons based upon the last season, so obviously they are planning for a relatively slower start this year,” he shares.

It doesn’t have to be so, since weather forecasting is getting better at predicting weather effects on retail. “All consumer businesses, including retailers, CPG and QSR companies, are increasingly looking at weather differently,” he says.

“We now have the data, forecasts and ability to measure precisely what the weather will mean in terms of what consumers will be wanting and buying and change our businesses accordingly,” he continues.

That gives fashion retailers the ability to pull weather data into their replenishment systems so that on Monday or Tuesday they can anticipate what inventory needs to be in the store to fulfill customers’ needs on the weekend.

“That data can also go into their pricing systems, to adjust prices to move excess inventory quickly,” he adds.

Retailers that leverage weather data have an unprecedented ability to meet consumer demand where and when it is needed. “Weather used to be an uncontrolled risk factor. Now retailers are beginning to leverage it to better serve their customers and so better serve their shareholders,” Walsh continues.

How retailers are leveraging weather to grow sales

Walmart and Subway are retailers that use weather insights to anticipate customer needs in advance of changing weather. He also shared how Walgreens and hair-care brand Pantene used weather strategically to bring people into the store.

Themed around the concept of the ubiquitous bad-hair day, Walgreens and Pantene used data analytics to study the different kinds of weather that cause them, such as dry days, humid days, windy days. Together they aligned the appropriate Pantene product for that kind of day in a “Haircast” mobile campaign, that was geo-targeted with a $2 coupon to redeem for products at Walgreens.

“It was super effective at driving traffic into Walgreens and sparked product demand,” Walsh shares. “But it also had a halo effect when people came into the store and bought other things they saw.”

Just think of the amount of flip flops, shorts and bathing suits a similar weather-targeted program could move?

In a final question, I asked Walsh about how weather may impact online shopping, since even in a Polar Vortex or a Bomb Cyclone–two foreboding-sounding weather systems the country faced this winter–people can shop online, as long as the electricity holds out.

“Weather’s influence on shopping is increasing no matter if you are shopping in-store or online. But today people can plan their lives around the weather, especially now that we carry weather forecasts in our pockets thanks to mobile phones,” he explains.

“The favorable weather we will see this spring will encourage people to get out and shop for seasonal fashion earlier . And once they are in the store, fashion retailers can benefit from the ‘halo effect’ to buy other things that catch their eye,’” Walsh concludes.

With a bigger tax refund in people’s pockets, an early spring and a late Easter giving them plenty of time and opportunity to refresh newly-edited wardrobes, thanks to Marie Kondo’s KonMari teaching, fashion retailers are set for a great spring-summer season. Get selling.

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