Americans willing to replenish closet, but shipping snafus can affect retailers

Some of us say “so much time” to sweat pants.

In the last week of February, seven of the ten best-selling items on the Anthropologie website were dressed, the company, a unit of Urban Outfitters, said this week during a earnings conference call. So far, she said, it was lucky to see only one or two dresses enter the list of the top 10.

Urban Outfitters CEO Richard Hayne described the change as surprising and very positive.

“Until recently, fashion was predominantly … casual and comfortable for the home,” Hayne said. “We’re starting to see: what I call ‘outbound fashion’ is starting to gain strength. The garment business will change in terms of the categories we sell.”

Clothing sales fell 19 percent last year, according to market researcher The NPD Group, as Americans stayed home and focused their spending on groceries and other household commodities. .

When shoppers bought clothes, comfort was the issue: tracksuit pants sales increased 17% year-over-year and sleepwear increased 6%, NPD said. Within fashion footwear, which fell 27% year-on-year, shoe sales rose 21% as consumers mixed from cooking in the kitchen, to making video conferencing calls from the bedroom, to streaming the latest series from the living room couch.

Distributors such as Urban, Gap, Abercrombie & Fitch, Macy’s and Nordstrom had to quickly turn their merchandise on when lifestyles abruptly changed last spring. They removed tight blazers, skirts and pants from the mannequins, to be replaced by elastic joggers and loose pajamas.

But the launch of the Covid vaccine has increased rapidly in recent weeks, averaging two million daily vaccine doses in the United States. At the same time, the number of reported cases decreases. Encouraged by the positive trends, a wave of states has eased Covid restrictions, opening up the possibility for people to venture into restaurants or spend a night at the cinema. This means that many Americans will be digging in their closets looking for something new to put on.

It’s time for retailers to pivot, again. But this will not come easily. Companies continue to face U.S. port congestion and shortage of containers, accumulating goods, which will make shelves in fresh suits even more complicated. Management teams said delays in shipping range from three to four weeks and add up to higher transportation costs.

“Historical volumes, social measures of distancing for workers, as well as the shortage of drivers to transport goods cause significant congestion and delays in processing times,” said Wells Fargo analyst Ike Boruchow.

Macy’s department store chain has said it has an established plan to quickly replenish formal clothing and work as its customers begin to resume more normal activities. Many analysts are betting on a rapid change in buying behavior.

“People have money in their pockets, they’re fed up with the same equality and you’ll see a shopping spree to feel good,” said Stacey Widlitz, president of SW Retail Advisors. “The weather changes and people feel positive when they go out again, or even sit in the park in a suit.”

“The nature of human beings is that they want to feel good,” he added. “They want to feel fresh, especially for the younger generations. It’s your entry price to re-socialize.”

Retailers are already taking advantage of these messages. Kohl’s website proclaims “The Big Soda,” while Banana Republic announces a “spring awakening.” The new advertising campaign of the men’s clothing manufacturer, Suit Supply, which alludes to a “New Normality”, has gone viral on social media this week.

Others, however, are still covering their bets, anticipate a continuous push with comfortable, lounge clothes by 2021. It’s likely that some consumers will want to stay in a more casual wardrobe, to which they’ve become accustomed over the past twelve months. Companies, in turn, can choose to relax office dress codes as they return their templates.

Nordstrom continues to market “Work-from-Anywhere Style” on the home page of its website. Rent the Runway keeps a section of its mobile clothing app for “Entertaining at Home.”

Teen clothing retailer American Eagle earlier this week said it expects current quarter sales to be the strongest in three years, based on the growth of its Aerie brand, which sells options to work from from home, such as yoga pants, sports bras, pajamas and underwear.

Meanwhile, Kontoor Brands CEO Scott Baxter told CNBC that jeans are back in production as Americans look for a way to dress, just a little more than they’ve been doing in house. Kontoor’s brands include labels dedicated to Texan Wrangler and Lee.

“Denim is casual, it’s easy … you can dress, you can dress,” Baxter said in an interview earlier in the week. “As people return to the office, people are thinking about how they will dress and jeans seem to be the choice.”

But retailers don’t just have to worry about assessing the demand for clothes they review. They have had logistical headaches for much of the pandemic. And these do not seem to diminish, making it even more difficult to plan for spring, summer, and back to school.

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

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

For Urban, the main problem at stake today is access to containers to ship goods, explained Frank Conforti, chief operating officer, earlier in the week.

“While, yes, ports are experiencing absolute congestion, especially on the west coast … and we see delays of two to seven days in ports, the biggest challenge is actually the incoming ships, which have enough containers in Asia to introduce the product, ”Conforti said.

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

Companies are unlikely to order their inventories to match buyers ’demand until the back-to-school season approaches, he said. But like Widlitz, Telsey doesn’t think shoppers will be back in stores anytime soon for a new look.

“We haven’t spent on clothes in over a year,” Telsey said. “I think [people] i want to refresh your closets. “