Americans ready to replenish wardrobes, but confusion of shipments can plague retailers

Some of us are saying “see you soon” for sweatpants.

In the last week of February, seven of the 10 best-selling items on the Anthropologie website were dressed, the company, an unit of Urban Outfitters, said this week during a results conference call. Until then, he said, it was fortunate to see only one or two dresses make the top ten list.

Urban Outfitters CEO Richard Hayne found the move impressive and very positive.

“Until recently, fashion was predominantly … casual and comfortable for home,” said Hayne. “We are starting to see – what I am calling ‘fashion to go out’ is starting to take over. The clothing business will undergo a change in terms of the categories we sell.”

Clothing sales fell 19% last year, according to market researcher The NPD Group, while Americans stayed at home and concentrated their spending on groceries and other essential household items.

When customers bought clothes, the theme was comfort: sales of sweatpants increased 17% year over year and sleep sales increased 6%, NPD said. In fashion footwear, which fell 27% in the year, sales of slippers increased 21%, with the consumer shuffled from cooking in the kitchen, making videoconference calls in the bedroom and broadcasting the latest series from the living room sofa.

Retailers such as Urban, Gap, Abercrombie & Fitch, Macy’s and Nordstrom had to move their goods quickly when the lifestyle changed abruptly last spring. They removed blazers, skirts and tights from the mannequins, to be replaced by stretchy aisles and wide pajamas.

But the launch of the Covid vaccine has increased rapidly in recent weeks, with the United States now averaging 2 million doses of vaccine per day. At the same time, the number of reported cases is decreasing. Encouraged by positive trends, a wave of states eased Covid’s restrictions – opening up the possibility for people to venture out to restaurants or a night at the cinema. This means that many Americans will search their closets for something new to wear.

It’s time for retailers to spin – again. This will not be easy, however. The companies continue to face congested ports in the United States and shortages of containers, accumulation of goods, which will make it more complicated to stock the shelves with new clothes. Management teams said shipping delays range from three to four weeks and are associated with higher shipping costs.

“Historical volumes, measures of social distance for workers, in addition to the lack of drivers to transport products from trucks are causing congestion and significant delays in processing time,” said analyst Ike Boruchow of Wells Fargo.

The department store chain Macy’s said it has a plan to quickly replenish work and formal wear as its customers begin to resume normal business. Many analysts are betting on a quick turnaround in buying behavior.

“People have money in their pockets, they are tired of sameness, and you will see an explosion of well-being shopping,” said Stacey Widlitz, president of SW Retail Advisors. “The weather is changing and people are feeling good about going out again – or even sitting in the park dressed.”

“The nature of human beings is that they want to feel good,” she added. “They want to feel refreshed – especially for the younger generations. It is their entry price to socialize again.”

Retailers are already taking advantage of this message. Kohl’s website proclaims “The Great Renewal”, while Banana Republic announces a “Spring Awakening”. The new ad campaign by the men’s suit maker, Suit Supply, alluding to a “New Normal”, went viral on social media this week.

Others are still protecting their bets, however, anticipating the continued momentum with comfortable and comfortable clothing in 2021. Some consumers will likely want to keep a more casual wardrobe – the one they’ve grown accustomed to in the past 12 months. Companies, in turn, can choose to relax office dress codes as their workforce returns.

Nordstrom is still promoting the “Work-from-Anywhere Style” on the home page of its website. Rent the Runway maintains a section of its mobile app for clothing for “Entertainment at Home”.

Teen clothing retailer American Eagle earlier this week said it expects sales in the current quarter to be the strongest in three years, depending on the growth of its Aerie brand, which sells options for working at home, like yoga pants, sports bras, pajamas and lingerie.

Meanwhile, Kontoor Brands CEO Scott Baxter told CNBC that jeans are coming back, as Americans look for a way to dress, just a little bit more than at home. Kontoor’s brands include the Wrangler and Lee brands with a focus on jeans.

“Jeans are casual, it’s easy … you can decorate it, you can make it lower,” Baxter said in an interview earlier in the week. “As people come back to the office, people are thinking about how they are going to dress, and jeans seem to be the choice.”

But retailers need not just worry about assessing the recovery in demand for clothing. They had logistical headaches during much of the pandemic. And that doesn’t seem to be easing, making planning for the spring, summer and back to school seasons all the more difficult.

Nordstrom noted that shipping delays prevented some of his year-end products from reaching shelves and warehouses on time, hurting fourth-quarter results. The company is still selling this stock, the company told analysts earlier this week, and expects to return to normal inventory levels in the second quarter.

Gap also noted on Thursday, when it reported mixed fourth quarter results, that congestion at ports is expected to continue during the first half of the year. This will result in high inventory levels in the second quarter, said Gap.

For Urban, the biggest problem at stake today is getting access to containers for shipping goods, explained operations director Frank Conforti earlier this week.

“Although, yes, the ports are absolutely congested, especially on the West Coast … and we are seeing somewhere between two to seven days of delays at the ports, the biggest challenge is actually in the incoming ships, with enough containers in Asia to bring products, “said Conforti.

The limited availability of truck drivers to transport goods from retailers across the country remains another problem, said Dana Telsey, CEO and research director at the Telsey Advisory Group, in an interview on Thursday with CNBC’s Sara Eisen.

Companies are unlikely to organize their inventories to meet consumer demand until back to school, she said. But, like Widlitz, Telsey doesn’t think this will attract customers as soon as they return to the stores for a new look.

“We have not spent on clothing for more than a year,” said Telsey. “I think that [people] they want to renovate their wardrobes. “