As costs for necessities like food and fuel have risen, the demand for discretionary items has deflated. A September survey of consumers in six countries by First Insight found that 48 percent of shoppers are planning to cut back on apparel and footwear purchases due to higher prices, and fashion sits low in their spending priorities.
Consumer behavior is changing rapidly right now, Vera Bradley president Daren Hull told Sourcing Journal. And inflation is just one of the major forces in the market—along with war and the ongoing pandemic, to name a few—that is shaping spending. Earlier in the year, he noted that it was the consumer earning less than $55,000 who was most heavily impacted by rising food and energy costs. But by the second quarter, rising prices began to affect higher earners as well, and in turn changed consumer behavior more broadly.
“Whether you want to call it a recession or not, many of them are starting to act like they’re in a recession,” he said. “So more consideration on purchases, looking to buy things that will last for some period of time, starting to change some of their spending behaviors.”
As spending on non-essential goods slows, it becomes even more important to create a connection with consumers, Hull said. “One of the biggest things you can do is have a good relationship with your customers and have differentiation in your products,” he said. “Those are still great ways to both build a sustainable brand over time, but also how you as a brand can help navigate some of the difficulties in the economic climate.” Vera Bradley builds an emotional appeal for shoppers and differentiates its assortment through pop culture collaborations with names from Star Wars and Harry Potter to Disney. Another assortment planning strategy for these times, per Hull, is ensuring a wide range of price points to appeal to shoppers at varying circumstances.
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Given today’s numerous supply chain challenges, the brand is trying to add “buffer time” into its material sourcing by making decisions earlier. From a production perspective, it is strategizing to ensure it has stock in classic, core styles by trying to cut its purchase orders sooner to reduce transportation and manufacturing risks. Some seasonal items have also been moved up to build in extra time. However, Hull said Vera Bradley is taking a measured approach to avoid over-ordering since “trees don’t grow to the sky.”
Looking ahead to holiday, Mastercard projects a 7.1 percent lift year-over-year for sales between Nov. 1 and Dec. 24. Hull pointed out that even if sales match this forecast and grow, the units sold might actually be lower since many companies—including Vera Bradley—have had to raise prices.
“We tried to do our best to limit those increases as much as possible and to make sure that we have the best value for our customers, but we have definitely had to move prices upwards,” he said. “We’re very interested to see how the next 12 to 24 months play out, because there was obviously a tremendous amount of demand in this system and everybody was having challenges with cost increases. We’ve seen some of that alleviate itself recently, and we’re hoping that that’s a sign for things normalizing in the months, years to come.”
At Sourcing Journal’s Fall Summit on Oct. 18, Hull will be speaking one-on-one with Sourcing Journal editor-in-chief Peter Sadera about “Unchartered Waters: Inflation and Today’s Consumer.” This session will cover supply chain issues from a consumer insights perspective and explore how to recover from these challenges.
“We all sit at our desk and we deal with our problems—and there are plenty of problems to deal with for anybody who works in sourcing over the last couple of years,” Hull said. “Sometimes it’s good to get out, talk with people, see where you have common issues and see if there are some common solutions.”
Click here to purchase tickets to the Fall Summit.