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Retired Retail Director Terry Lundgren told CNBC on Friday that rising inflation would not be a stress point in the clothing market.
Lundgren, former executive chairman and managing director of Macy’s, said the industry is in fact welcoming what he called a “modest” 5% increase in consumer prices after a decade of inflation. non-existent “clothes.
“It’s not a big concern for clothing retailers,” he told “Power Lunch”. “You talk about a few bucks to increase the price. It’s not going to change the consumer’s opinion of the purchase.”
Lundgren’s comments come amid improving retail sales and declining consumer confidence in the United States as the economy continues to recover.
Despite this, Lundgren said the retail industry is relying on pent-up demand to sustain itself in apparel, boosted by a year of Covid-19 lockdowns and consumer purchasing power. He remains optimistic for the second half of the year as schools reopen and the country returns to a sense of normalcy.
Still, he acknowledged that the spread of the delta variant remains a risk for the company if not contained.
“Clothing is an event activity. If these events that we are counting on for the fall season, including back to school and concerts etc., that’s great news for clothing.”
The Labor Ministry said on Tuesday that clothing prices rose 0.7% in June, after rising 1.2% the month before. The clothing index, a component of the consumer price index, rose 4.9% in June from a year ago at the height of the coronavirus pandemic.
The Commerce Department said on Friday that retail sales had unexpectedly increased last month. The number is up 0.6% from May and 18% from June 2020. Regarding clothing and accessories, consumers spent 2.6% more in June compared to May and 47 % compared to a year ago.
Meanwhile, a University of Michigan survey released on Friday found that consumer confidence in the United States unexpectedly fell in early July. Preliminary results showed the Consumer Confidence Index at 80.8, its lowest level since February and down from 85.5 in June. Economists projected a July reading of 86.5, according to a Reuters survey.
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