The inflationary pressures have forced customers to cut back their spending. However, going back to work in corporate offices means that despite the higher prices, shoppers will add to their wardrobe. This was evident in first quarter reports of Dillard’s, Nordstrom and Macy’s and also at TJ Maxx stores.
Stores which emphasize more casual clothes including discounters like Walmart
as well as Abercrombie and Ross Stores
reported that sales were much weaker in the first quarter. The consumer is turning every dime over twice before spending it on anything frivolously.
One of the big sellers in the first quarter 2022 was men’s blazers. Purchase of blazers was needed because of change in sizes. Maybe a person ate too much during the pandemic and needed to cover himself with a better fitting garment lor work, conversely maybe he lost weight because he had too much time to exercise at home and now was trimmer and needed a new garment that fit. Also, many people have changed jobs and now must dress professionally.
Ladies’ dresses sold well the first quarter of 2022 for the same reason. The silhouette of most customers have changed, because we had more time to relax and eat well. But now prices have risen – food is up more than 14% and we see no likelihood that prices will be reduced soon – except for an occasional sale. Reports that inflation is abating means only those prices will not rise at the steep rate we have experienced so far but that they will remain at a high level. Even this news is encouraging.
Suddenly, we all go to graduations and weddings. Unions that were formed during the pandemic and unions that were postponed because of the pandemic have caused an avalanche of weddings. Of course, you have to dress up for the occasion and even wear a tie. Again, the department stores mentioned above and the maybe TJ Maxx will supply the desired outfit. The demand for dress-up will continue and maybe accelerate as we go into the summer and fall season.
Good news is that the US is slowly getting back to normal. 49 states have seen an improvement in the unemployment rate. Unemployment claims are down from 23 million at the start of the pandemic to just over 2.3 million in April of this year. Job postings are up 100% which is also an indicator of rapid economic recovery. So, spending for a new dress or suit may squeeze other discretionary spending, but consumers have the confidence of continued income. The annual inflation rate in the US, has slowed to 8.3% from a 41-year high of 8.5% reported last month. However, food prices are up 9.4% (the highest since April 1961). The index for gasoline fell 6.1% in April. This is significant, but gas is still at unaffordable high levels.
POSTSCRIPT: The ability to dress up will please many people and stores will benefit from this new demand. Discretionary spending will be lower and some spending will cease. The urge to be outdoors has been supplanted by the need to be part of an office team or creative group. Office parties will come back as the virus is more effectively controlled.