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Retail analyst Nikki Baird’s consumer predictions through end of year

By FashionUnited


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Retail |Interview


As high inflation raises the prices of gas and bills, consumers will be faced with tough spending decisions as seasons change, kids go back-to-school and budgets are weighed for holiday gifting. FashionUnited speaks with Nikki Baird, former retail analyst and Vice President of Strategy at Aptos, about how our purses will be impacted during the remainder of 2022.

“Do we have enough truck chassis to load the containers onto, enough drivers, operators of cranes, trains to transport it?” asks Baird. “Then there's the capacity to unload the merchandise at the other end, and get it delivered to stores." Less than a year ago supply chain issues dominated the headlines as transport of goods ground to a halt. But as society opened up again in fits and starts Baird says we have been left facing a new supply chain problem: A bottleneck of inventory. Due to it’s zero-tolerance policy on Covid, China’s reopening of factories did not happen in line with many other global manufacturing hubs and as members of the supply chain tried to work through the backlog that had built up, retailers were busy over-ordering.

“They ordered a lot with the expectation that they would only get a little so they were trying to game the system a bit,” says Baird. “For all the factories and fabric makers downstream, they had to decide if they were going to ramp up their capacity to capture this demand or if it was phantom demand."

The domino effect of phantom demand

Retailers are only now receiving orders they placed in the fever of lockdown. “I’ve talked to retailers who said they were receiving orders in May or June that they had expected for Holiday 2020,” says Baird. “So, as far as chaos in the supply chain, it’s still very real, it’s still very much as issue."

One upcoming apparel-heavy period which will be impacted is back-to-school shopping. Last year retailers were pulling out onto the store floor space- or dinosaur-themed merchandise because they had no stock that reflected the new movies or new content that was being released. “This year it’s the same, not as bad as ’21, but you might find one Jurassic World T-shirt, one Buzz Lightyear lunchbox,” says Baird. “Retailers anticipating this challenge ordered themed apparel. It’s not licensed goods, but they’re doing what they can as it’s still anybody’s guess what’s going to show up in deliveries.”


Adding another layer to the problem is that retailers didn’t shift their buying in anticipation of changes in consumer demand. Says Baird, “They continued to double down on pandemic buying behavior so when you go in stores, you still see an awful lot of athleisure while you’ve got every employer trying to convince their employees to go back to the office. So there is inventory mismatch against what consumers are buying."

Travel related spending, another big category for this time of year, has left retailers unprepared. They didn’t anticipate it soon enough to be positioned for consumers ready to buy now.

Is sustainable shopping a priority for consumers in 2022?

As we are now largely on the other side of the pandemic crisis all this excess product would seem to add up to a sustainability nightmare. Most likely, the merchandise will go on markdown, and eventually into landfill. Sustainability purchasing is at an interesting crossroads, believes Baird.

“Now you have to layer inflation on it. We’re seeing data showing that as inflation goes up, consumer willingness to pay more for sustainable purchases go down. But that’s predictable. Consumers have been pretty consistent in telling us that while they’ll prioritize sustainable goods, they're not necessarily willing to pay premium for them.” But the pressure for sustainable options isn’t going to go away. Despite the increased cost associated with creating eco-friendly goods, Baird says only retailers who can present sustainability at the same price point will be successful. “Retailers are very focused on Levis reducing the amount of water in a pair of jeans or Allbirds using more eco-friendly materials in their soles and while those things can save money for a company, consumers aren’t willing to pay more. They look at it as it should be a choice between two same-priced sneakers, and if one is sustainable and one not, they’ll pick the sustainable one.”

Baird identifies a positive change that might be imminent in the area of fashion sustainability which she is observing in the financial sector: Pushback on greenwashing. “Regulators are going after companies making ESG claims and banks that are operating ESG funds and indexes because the qualifications have not been that stringent.”

To the question of whether consumers will reduce fashion spending given the financial uncertainty and talk of looming recession, Baird has seen little evidence of this among the fashion brands that use Aptos solutions. She even offers an optimistic note. “What will offset it is a commitment to going back to school. Consumers are cutting discretionary spending in other areas to be able to fund the back-to-school purchase for their kids and that’s apparel-heavy.”

Looking ahead to holiday and gifting, another apparel-heavy time of year, says Baird, “Instead of a big screen TV maybe you get a sweater this year. I think we will see an impact in the consumer electronic and big ticket items, with consumers shifting to smaller luxuries such as fashion buys.”

Consumer behavior
Sustainable Fashion