Inflation Tops List of Retail and Fashion Industry Concerns
WWD’s latest webinar with industry experts from Kearney focused on the results of a recent executive sentiment survey that was conducted over the summer. The results showed concern surrounding economic recession and the impact of inflation as fashion retailers and brands navigate a landscape fraught with changing consumer behaviors.
The webinar, titled “Inside the Minds of Today’s Fashion Industry Leaders,” featured Brian Ehrig, partner and global head of Fashion and Luxury at Kearney; Vincent Barbat, partner and Europe head of Fashion and Luxury, and Nora Kleinewillinghoefer, partner and Americas head of Fashion and Luxury at Kearney. This reporter moderated the session.
“Inflation or economic recession is by far the top concern,” Ehrig said of the survey results. “Everything else falls far below that in terms of priorities.”
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Ehrig said a third of executives surveyed found inflation or economic recession extremely concerning or very concerning, adding, “and everything else falls pretty far below that. And that really tracks all the way around the world and every geography is in the same situation.”
The amplified focus on macroeconomic influences underscores a broader tension in an industry deeply connected to consumer confidence and discretionary spending. However, the data portrayed a significant geographic variance in these concerns, with differing impacts on European and American markets.
“From a European standpoint, there are two to three big markets that make the luxury markets a success over the last few years,” Barbat said. “China is definitely one very important market as well as the U.S. quite frankly. In the last few months we have witnessed a slowdown of both the U.S. and Chinese market, which has not recovered since the pandemic. I think even though all of these concerns are extremely important, the most critical one would certainly be the evolution of the economy in China. For some of the big brands that have global reach, it could represent 40 to 50 percent of the business. So, you can imagine that if China is going down, it has a significant impact on the economics.”
Kleinewillinghoefer noted that aside from inflation, top concerns were “somewhere between 30 and 45 percent in terms of extremely concerning or very concerning, which I think highlights something that we’re hearing in the market a lot — that there’s just such a breadth of concerns that executives are facing right now and that it’s actually very hard to focus on one issue independently,” she said. “It really is a matter of focusing on all the different strategies on all the different areas. And executives for the most part in the latter part of the year as well as in the former half of the year, have been having to divert their attention to a number of different important issues.”
Apart from economic headwinds, inventory management emerged as a pivotal area of focus. “Almost 80 percent of the respondents indicated that understanding consumer trends and insights is essential or very important,” Ehrig said, shedding light on the perennial challenges of aligning inventory with fluctuating market demands.
The discussion also touched upon the pivotal role of artificial intelligence in reshaping the industry. “Predictive AI is becoming table stakes for inventory management,” Kleinewillinghoefer said, stressing on the transformative impact AI is poised to have, not just operationally but also in enhancing the consumer experience in luxury markets.
The panelists said fashion apparel and retail executives should prioritize core retail issues such as inventory management and sophisticated consumer insights tools, driven by AI and data analytics. This reflection echoed the sentiment that amidst rapid market shifts and technological advancements, foundational retail practices remain crucial.
Meanwhile, the adherence to sustainability seems to wane under economic pressures. “When your house is on fire, it’s hard to think about sustainability….You can’t really do sustainability efforts if you don’t have a company,” Ehrig said, indicating the tension between immediate business pressures and long-term sustainability commitments.
The discussion underscored a fundamental narrative: The fashion and luxury industry stands at a complex intersection of economic turbulence, shifting consumer trends and rapid technological evolution. The way forward needs to have a focus on agility, an enhanced understanding of market forces and a balanced approach to innovation and fundamental business practices.
[To download the free survey, CLICK HERE.]
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