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The Pandemic Is Accelerating Existing Trends in Denim Retail

The future of denim retail was up for debate during Kingpins24.

In a panel moderated by Sourcing Journal president Edward Hertzman, John Deputato, The NPD Group president of U.S. apparel, and Mark Cohen, director of retail studies and adjunct professor at Columbia Business School, traded their viewpoints on how the pandemic is affecting apparel retail.

While the denim sector has been adopting new digital tools for online retail and integrating more comfort-stretch technology into fabrics for some time, these factors—along with record unemployment rates and store closures—are forcing the denim industry to come to terms with an unfamiliar retail landscape.

“I think there’s some enormous changes going on that were already evident before the crisis,” Cohen said. “There are some enormous changes that are taking place within the crisis. And when the crisis is finally over—and I don’t think that’s going to come anytime really soon—we’re going to see some lasting changes.”

Product placement

Distribution is closely connected to the apparel categories and brands that are thriving during the cornavirus pandemic.

Following the initial spike in online sales for essentials items like toilet paper and sanitizer, and the flood of sales that followed for products that enhance the at-home experience (i.e. air purifiers, waffle makers and Roomba vacuums), NPD Group has seen consumers shift their focus to comfort-driven apparel categories like innerwear, socks and pajamas.

Notably, Deputato said these are apparel categories sold by retailers that also sell essentials, like Walmart, Target and Amazon. “And if you sell denim and workwear through these stores, you’re doing very well,” he said.

In fact, total apparel sales across the U.S. are down only 1 percent versus last year at the same time, he said.

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Meanwhile, online business, Cohen said, has been “running like a house on fire for several years now” with some categories ahead of others and driving the space.

The pandemic, however, has sped up this online evolution. It has made all consumers online shoppers—even those who’ve never done any significant purchasing online prior to COVID-19.

“I can’t imagine how that acceleration of business over to this new marketplace is going to abate,” he said. “It probably won’t run at the same pace it’s running out at the moment. But this is a real kick in the pants for anybody and everybody who’s got a legitimate online presence with an ability to fulfill orders in any kind of reasonable regular way.”

Reality bites

Though there are pockets of positivity, the reality, Cohen said, is that millions of unemployed consumers are going to see their unemployment checks run out and government subsidiaries end.

“They’re going to load their credit cards up if they haven’t already done it. They’re going to discover their credit card limits have been lowered on them,” he said. “They’re not going to be able to shop, the way they would like because they’re just not going to have the financial wherewithal to do it.”

Once again, priorities will shift to essentials—and this mindset will linger. “The consumer who has been focused on things they really want, that they’ve got to have, is something we’re going have to wait a few years for to return,” Cohen said.

School daze

Nothing is untouched by the uncertainty of the coronavirus, including peak shopping seasons like back-to-school and holiday.

“We know that about 80 percent of the volume the back-to-school is really done during two months, which is July and August,” Deputato said.

But this year, he said retailers can expect consumers to spread out their purchases, especially as individual states reopen on different timetables. And before consumers return to brick-and-mortar for their back-to-school buys, they want to see more sanitization and touchless checkout. “Social distancing is going to be important,” Deputato said.

In short, back-to-school will happen. Retailers, however, will have to be nimble and take the wins where they find them.

“Kids will need clothes because they size up and grow. College students will be looking for new clothes. There is going to be some pent-up demand, for sure,” he said. “But there’s no playbook for this.”

Holiday in 2020, on the other hand, may look a lot like how retail is currently operating. Last holiday was the most promotional holiday that NPD has ever tracked and the firm saw online growth significantly up. In particular, Deputato said BOPIS (buy online, pick up in store) purchases to continue gathering momentum.

“Holiday is a long way off, but I expect online to accelerate, BOPIS to accelerate and heavy discounting to continue,” he said.

Denim outlook

Consumers will eventually step back out into society and they will need to dress the part. Casual attire, however, is not going away anytime soon, and it’s a fact that Deputato said bodes well for the denim category. As long as manufacturers deliver on consumers demand for comfort and performance, he said denim stands a fair chance to be part of the casual apparel rebound.

Cohen echoed the sentiment, noting that the denim business was pretty good prior to the pandemic.

“It’s a universal fabrication, it’s not a business that’s been in any kind of decline from a consumer usage point of view,” he said. “Indigo blue and black are the uniforms that resonate and have always resonated throughout the world.”

In particular, the retailers that had increasingly powerful market share and the manufacturers that had increasingly important market share on the supply side are “going to be fine,” Cohen said. They may not be selling to as many customers as they were prior to the pandemic, but they’re going to be selling to the retailers that are doing business, he added.

“The trends that were emerging pre-pandemic are going to be ever more evident on the other side of this,” Cohen said.

Deputato agreed: “I think we’re going see all the things that we thought were trends before pandemic are now accelerating.”