Americans ready to restock their closets, but shipping snafus can plague retailers

Some of us say “so long” to sweatpants.

In the last week of February, seven of the 10 best-selling items on Anthropologie’s website were dresses, the company, a unit of Urban Outfitters, said this week on a earnings conference call. . Until then, he said, he was lucky to only see one or two dresses making the top 10.

Urban Outfitters CEO Richard Hayne called the change striking and very positive.

“Until recently, fashion was mostly… casual and comfortable in the home,” said Hayne. “We’re starting to see – what I call ‘way out’ is starting to take hold. The apparel industry is going to experience a shift in the categories we sell. ”

Clothing sales fell 19% last year, according to market researcher The NPD Group, with Americans staying at home and focusing their spending on groceries and other household essentials.

When shoppers shopped for clothes, the theme was comfort: sales of sweatpants jumped 17% year-over-year and sleepwear jumped 6%, NPD said. In fashion footwear, which fell 27% year-on-year, slipper sales rose 21%, as consumers mixed from cooking in the kitchen, to making video conference calls from the bedroom, to streaming the latest series from the living room sofa.

Retailers like Urban, Gap, Abercrombie & Fitch, Macy’s and Nordstrom had to quickly rotate their merchandise when lifestyles abruptly changed last spring. They pulled blazers, skirts and fitted pants from the mannequins, to be replaced by stretchy joggers and roomy pajamas.

But the deployment of the Covid vaccine has accelerated rapidly in recent weeks, with the United States now taking an average of 2 million doses of vaccine per day. At the same time, the number of reported cases is declining. Encouraged by the positive trends, a wave of states have relaxed Covid restrictions – opening up the possibility for people to venture out to restaurants or a night at the movies. This means that many Americans will be rummaging through their closets looking for something new to wear.

It’s time for retailers to pivot – once again. It won’t come easily, however. Businesses continue to face congested US ports and container shortages, a backlog of goods, which will make it even harder to stock shelves with new equipment. Management teams said shipping times vary from three to four weeks and are associated with higher transportation costs.

“Historic volumes, social distancing measures for workers, as well as shortages of drivers to move goods outside are causing traffic jams and significant delays in processing times,” Wells Fargo analyst said , Ike Boruchow.

Department store chain Macy’s said it has a plan in place to restock work and formal wear quickly, as its customers begin to return to more normal activities. Many analysts are betting on a rapid turnaround in purchasing behavior.

“People have money in their pockets, they’re tired of the similitude, and you’re going to see an explosion of wellness shopping,” said Stacey Widlitz, president of SW Retail Advisors. “The clock is ticking, and people are feeling optimistic about going out again – or even sitting in the park in their dresses.”

“The nature of human beings is that they want to feel good,” she added. “They want to feel fresh – especially for the younger generations. This is your price tag for socializing again.”

Retailers are already getting this message. Kohl’s website proclaims “The Great Refresh”, while Banana Republic touts “Spring Awakening”. Men’s costume maker Suit Supply’s new ad campaign hinting at a “new normal” went viral on social media this week.

Others still hedge their bets, however, anticipating continued momentum with comfortable loungewear in 2021. Some consumers will likely wish to stick with a more casual wardrobe – one they’ve become accustomed to over the past 12 months. Businesses, in turn, might choose to relax office dress codes as their workforce returns.

Nordstrom still markets “Work-from-Anywhere Style” on the home page of its website. Rent the Runway maintains a section of its mobile app for outfits for “Entertaining at Home”.

Teenage and teenage clothing retailer American Eagle said earlier this week that it expected its current quarter sales to be the strongest in three years, building on the growth of its Aerie brand, which sells work at home options like yoga pants, sports bras, pajamas and lingerie.

Meanwhile, Kontoor Brands CEO Scott Baxter told CNBC jeans are making a comeback, as Americans scramble for a way to dress, barely any more than they do at home. . Kontoor’s brands include the denim-focused brands Wrangler and Lee.

“Denim is casual, it’s easy… you can dress it up, you can dress it up,” Baxter said in an interview earlier in the week. “When people go back to the office, people think about how they’re going to dress, and denim seems to be the choice.”

But retailers don’t just have to worry about measuring the rebounding demand for clothing. They have had logistical headaches for much of the pandemic. And those don’t seem to be easing, making planning for spring, summer and back to school even more difficult.

Nordstrom noted that shipping delays prevented some of its holiday merchandise from reaching shelves and warehouses on time, hurting its fourth quarter results. The company is still working on selling that inventory, the company told analysts earlier this week, and hopes to return to normal inventory levels by the second quarter.

Gap also noted on Thursday, when it reported mixed results in the fourth quarter, that port congestion is expected to continue throughout the first half of the year. This will lead to high inventory levels in the second quarter, Gap said.

For Urban, the biggest issue at stake today is access to containers to ship goods, COO Frank Conforti explained earlier this week.

“While, yes, ports absolutely have congestion, especially on the west coast … and we see between two and seven days of delays in ports, the biggest challenge is actually on incoming ships,” having enough containers. in Asia to bring products, ”Conforti said.

The limited availability of truck drivers to transport merchandise from retailers across the country remains another issue, Telsey Advisory Group CEO and research director Dana Telsey said in an interview Thursday with CNBC’s Sara Eisen.

Companies are unlikely to sort their inventory to meet buyer demand until school starts, she said. But, like Widlitz, Telsey doesn’t think shoppers will be returning to stores for a new look anytime soon.

“We haven’t had any clothing expenses for over a year,” Telsey said. “I think [people] want to refresh their wardrobe. “