2024 Crystal Ball: 4 Key Things to Watch in the Footwear & Apparel Industry
Last week we were fortunate to engage a group of colleagues – all deep experts in their field – on the currently popular subject of the “2024 Outlook for our Industry.” It’s always great to get together with folks outside of your normal conversational circle to discuss consumers, business dynamics, retail predictions, and to brainstorm on big topics.
Attendees included people from all over the world and a variety of different functions, so the opinions and content were very rich. A few themes emerged that we thought we’d share:
1. Uncertain but Cautiously Optimistic Consumer Environment
While we have seen some footwear and apparel brands raise their guidance (https://www.bloomberg.com/news/articles/2024-01-08/lululemon-raises-guidance-after-strong-holiday-sportswear-sales) we’ve seen others lower expectations (https://infotechlead.com/cio/nike-lowers-digital-growth-expectations-despite-digital-transformation-spending-82480). Factories are not seeing an uptick in orders. Labor rates in the US are up, providing hope for increased spending. However, there’s still a lean towards spending on “experiences” (travel and dining) over “things” …. and significant credit card debt may temper that spending (https://abcnews.go.com/US/credit-card-users-avoid-mounting-debt-bills-reach/story?id=106479070 )
2. Politics and Policies are going to have a major influence around the world.
Approximately 3 billion people globally will be voting at some point in 2024. Along with that will come a lot of rhetoric, promises, and corresponding media coverage that will influence the masses. Indeed, countries are already game-planning for eventualities of non-preferred world leaders being elected. Further there is an increasing politicization of ESG efforts, trade agreements and planned duties. All of this is happening while new EU regulations are coming on board regarding Supply Chain Transparency and Labeling, as well as new laws in California and other states regarding the use of PFAS and other chemicals of concern. Our group of experts believe that it is imperative to stay the course on ESG investments and especially in Supply Chain Transparency.
3. Pressure on Margins will still linger
The Footwear and Apparel Industry will remain fragmented with companies vying for market share and growth. We expect to see continued margin pressure with ongoing product cost inflation due to a number of factors including unpredictable shipping, fluctuating raw materials, and labor costs. Brands will have to focus on streamlining operations to optimize pricing and lower cost of goods for the consumer.
4. Value and Quality
Our group of experts believe the market is quite stale and in many ways is uninspiring. In that environment, Consumers may focus on buying ONE great product that will last longer as opposed to a lot of inexpensive fast-fashion type items (not that fast fashion is going away). Further, “value” means a lot of different things, and Brands that have something MEANINGFUL to offer the world have a better opportunity than those that believe value implies lower costs. Finally, while the bigger brands stall out in terms of providing this value, mid and small sized brands have a ton of opportunity to “put the pedal to the metal” and accelerate their businesses.
But look … in the end, refer back to Point #1 above - Uncertainty with Optimism. Orders to factories are already in for the first half of 2024 and the outlook is pretty clear. But let’s see what we can do with the back half of the year to make it a great one for the industry, for consumers, and for the planet.
We would love to hear your thoughts and comments on the outlook for 2024.