Five key fashion retail predictions for 2019
The year 2019 is likely to another volatile year in fashion retail as trends evolve to reflect changing consumer tastes and behavior,
In a note to investors Canaccord Genuity consumer analyst Camilo Lyon identified five predictions that could surprise investors in 2019. They are:
1. Fashion sneakers fade: After a robust few years of growth, could 2019 be the year in which the fashion sneaker trend decelerates? The fashion world fully embraced the athletic aesthetic as evidenced by the “dad” sneaker trend last year. As with most things fashion, trends evolve, change, shift to the next. For now, we have yet to see what the “next” could be, thus fashion sneakers will likely evolve to encompass new styles, shapes, and embellishments resulting in another strong fashion sneaker year.
2. Denim finally takes share from athleisure: We have written extensively about the resurgence of denim for the past couple of years, and we expect 2019 to be no different in that it becomes a more significant part of consumers’ wardrobe. What’s more, with the potential IPO of Levi’s coupled with the spin-off of VFC’s jeanswear business into a separate entity called Kontoor later this year, investors will have a better view on the growth rates of two category leaders. That said, will it take share from athletic? With each passing year, the question of athleisure rolling over is rightly asked.
In our view, the companies most at risk are the ones that remain one dimensional with their assortment. The consumer is constantly evolving, and brands should too. To that point, we highlight LuLu’s [Lululemon Athletica] new bottoms assortment that incorporates what seems like its most ambitious offering of nonlegging bottoms that include high waisted, wide leg pants that function from “work to weekend.”
3. AR is the next leg of the retail experience: Consistent with our view on the importance of retailers investing in unique in-store experiences to drive traffic, a natural extension of that would entail augmented reality that better connects the digital world with the physical world. This year could be the breakout year for brands and retailers using augmented reality. The challenge will be managing managing costs while at the same driving higher rates of conversion.
4. More brands attempt to offer subscriptions, only to fail: In our opinion, subscription models, if successful, are the holy grail, largely due to the predictability of cash flows, low incremental expenses, and greater customer loyalty, which in turn translates into higher multiples paid to these models. LULU’s recent pilot of a subscription-based loyalty program will inspire other retailers to do the same, but most will fail because their relationship with their consumer is likely based on discounting.
5. The sharing economy in apparel accelerates at the expense of fast fashion: Millennials continue to drive our process, particularly with respect to the values they ascribe companies/brands from which they buy. To that end, the growing importance of conscientious consumerism makes companies that focus on sustainability and have a social beneficial purpose will win over those that do not. While fast fashion has been a boon to consumers for the better part of the last decade mainly due to the price deflation most notably felt in apparel, 2019 could be the year in which (millennial) consumers care less about “price value” and care more about “social value.”
As such, companies like Rent the Runway, Le Tote or Poshmark could see a favorable demand shift as consumers opt to buy less apparel and rent more of it.
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