The threat of a recession looms like a specter over the world’s economies, sending ripples of quiet anxiety through the fashion industry. Between the ongoing disruption caused by the U.S.-China trade war and the seemingly inevitable financial downturn, brands and retailers may soon be thrust into fight or flight mode.
At retail, signs pointing to a recession have already emerged. Iconic luxury retailer Barneys flailed its way through a painful bankruptcy this year, while Nordstrom, a longstanding standard-bearer for department stores, has reported three consecutive quarters of falling earnings.
For footwear brands, the path forward is murky. At Las Vegas’ FN Platform trade show in August, brands and showrunners alike expressed dismay at the lack of “newness” on display, citing economic uncertainty as an inhibitor to innovation.
“Brands are asleep at the wheel,” cautioned Leslie Gallin, president of footwear at Informa Markets, which organizes the trade show. She worried that consumers who are poised to buy would be uninspired by the industry’s newest offerings.
“It’s expensive to develop new in the shoe business, and I truthfully think this is the main reason we see so much repetitiveness,” Gallin told Sourcing Journal.
“We are all tasked with delivering profit and keeping the lights on,” she explained, speaking to brands’ anxieties about taking risks on fresh materials and designs.
“Basics would tend to be the flavor of the moment when people are unsure,” Gallin conceded, but with a consumer who is less concerned about labels than ever before, “style, mission and brand stories” are the elements that brands should be using to curry favor with shoppers.
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Instead, many are being cautious about throwing the consumer curve balls—and they’re taking their cues from retailers. While buyers used to roam sales floors looking for never-before-seen trends, retail planners are now relying more heavily on historical data and recommending repeat purchases of the products that sold through most effectively.
Still, Gallin believes in ensuring that stores are offering consumers the “new and unexpected.” Freshness is something they actively seek out, she said, and it’s what will ultimately entice them to buy.
“If the consumer is conditioned to see the same shoes they already own [at retail]… this creates apathy,” she added.
The repetitiveness that the industry is already demonstrating as it moves forward into 2020 may force consumers to turn away from stores toward online channels, direct-to-consumer brands and even their own closets, she said.
Today’s millennial consumers have also demonstrated different values than their predecessors, Gallin explained, and that presents its own set of challenges. “We’ve been used to the ‘conspicuous consumption’ customer, and now we are seeing a customer who spends money on travel, food and experiences,” she said. In the event of a recession, footwear may not make the cut.
Between economic uncertainty and the movement toward sustainability, “people will be buying fewer things and making purchases more carefully,” agreed Sharon Graubard, founder and creative director of MintModa, a trend forecasting group.
While Graubard wouldn’t call retail’s current state a “fashion dead zone,” she cautioned that “It’s a mistake for stores and manufacturers to play it too safe during a recession—that results in consumer boredom, which is never a good thing.”
Consumers are motivated to buy by “a bit of novelty,” she said, qualifying that as a mix of practicality and newness.
“Novelty doesn’t have to mean fast fashion,” she added—and likely, it shouldn’t.
“It can mean that a brand has values the customer relates to, as well as a new color, an interesting fabric, a bit of handicraft,” she said. These elements of freshness, “combined with a sense of quality and timelessness,” will spur sales even during a recession, she said.
Looking back to the last serious economic downturn, the Great Recession of 2008, Graubard pointed out some similarities in trends.
“The recession of 2008 spurred a new interest in minimalism and a no-logo look. Ostentation was out,” she explained, citing collections from Rick Owens and The Row, which inspired “a quieter approach to luxury.”
“It was also a time when ‘heritage’ became a buzzword, with brands celebrating their roots and offering clothes that conjured up an idealistic American past,” Graubard said, pointing to labels like Pendleton reviving their iconic plaid shirts, and utilitarian footwear brands like Red Wing and Blundstone returning to popularity.
More than a decade later, the trend toward practical footwear has come full circle again. “Sneakers are worn with everything, from tailored suits to cocktail dresses,” Graubard said—along with other comfortable options like flats or low block heels.
“That’s good for women in terms of making an investment, because it’s about shoes that she will wear over and over again,” she added.
Still, a bit of whimsy can go a long way in grabbing the consumer’s attention. “There’s so much fantasy up-trending in fashion—the passion for bright colors and splashy florals for example, and the penchant for ruffles and sparkle for day,” Graubard asserted.
When coupled with a low, practical heel, fresh colors and metallic finishes, along with details and embellishments, can add enough visual interest to spark “the emotional joy of shopping,” even in an atmosphere of economic uncertainty.
While the increasingly cost-conscious consumer may move toward more basic, wearable purchases when it comes to apparel, “Accessories and footwear are places where a woman can add that bit of fantasy,” Graubard said.
Like Gallin, Graubard believes that the impending economic downturn poses different challenges at retail than did 2008’s slowdown.
“There is heightened awareness of fashion’s environmental footprint, the climate crisis and consumers’ reaction to that” this time around, she said.
Those concerns have resulted in a newfound interest in buying vintage and used clothing, as well as the rise of rentable apparel and accessories. Today’s consumers are finding ways to “satisfy the fashion urge without fast fashion,” Graubard said, and a recession may further that agenda.
“As geo-political issues like climate change, clean water, landfills and other environmental concerns move into the forefront, consumers—especially younger ones—will base their decisions on more than just price and trendiness,” she added.
Instead, tighter purse strings might deepen the consumer’s current pull toward “slow fashion,” or products that are sustainably produced and built to last more than a season.
These trends have taken hold in recent seasons, and Graubard believes that a recession could crystalize a true evolution in consumer behavior.
“We work in a very cyclical industry,” countered Allan Ellinger, co-founder and senior managing partner at MMG Advisors, which provides financial advisory services to retail clients.
While his clients in the fashion industry are undoubtedly “cognizant that there’s been a slowdown,” noting “store closures and reductions in inventory,” Ellinger believes that the industry’s collective caution could be overblown.
“I think the tariff situation is having more of an impact right now than the possibility of an impending recession,” Ellinger said, though he conceded that both contribute to an air of anxiety that’s raising inhibitions in brands and retailers.
One way that that those worries play out is in his clients’ retail assortments, which he admitted can take a hit in the face of financial headwinds.
“One way in which a brand gets to maintain margin is by betting on styles that are safe,” he explained.
“Most of our clients will always repeat styles that have been successful; that’s kind of endemic in most businesses,” he added. “They have proven sell-through, and they are less likely to result in markdowns.”
Fashion items—or styles that deviate from the basics—are more likely to end up on a sale shelf at retail, he argued.
Though he understands brands’ impulses to play it safe, Ellinger also believes it’s a losing strategy. “I think the industry tends to be more optimistic. Marketers are optimistic by nature,” he asserted.
If the industry is going to continue to inspire consumers, it needs to harness that optimism—even in the face of uncertainty.