Q4 2023 Review

Economic Watch Recession Ruins Strategic Responses for Apparel Retailers in a Fluctuating Economy 27 November 2023 3

In our previous apparel watch, we highlighted how most consumers are going back to basics. After an extensive research in Q4 2023, seems like consumers still continue to seek timeless, versatile, and sustainable clothing options. Brands are adapting well with their refreshed portfolios and adopting new strategies to stay relevant in the industry. As business owners, it will be a good idea to capitalize on these trends and take it as an opportunity, especially as cotton and various manufacturing inputs are decreasing in price.


Key Points
  • Consumers are showing trends towards buying luxury
  • Raw material prices on a tailwind
  • Climate changes affecting spending in activewear
  • Gen Z is now the new center of attention

The Return of Luxury

Our last report mentioned that due to the rise of the unemployed, many consumers resorted to buying only what they needed instead of splurging. Due to this, luxury wear was deeply impacted. However, since the employment rate has spiked back up in the last quarter, it looks like luxury is recovering well.

  • There’s a noticeable trend where consumers are increasingly interested in purchasing top-tier, luxury products.
  • With a record revenue of over 86 billion, which is a 9% increase, LVMH has reported that their buyers are willing to spend on their products with significant achievements in fashion and leathers goods, watches and also jewelry, even though prices are rising.
  • Of course, when prices go up, it’s not simply because the demand allows for it, but because there’s a justified reason behind it.
  • This could be due to the quality, craftsmanship, materials, or technology involved in creating these products, making them worth the higher price.
  • Kering brands such as Gucci and Bottega also showed good resilience in leather goods and women’s ready to wear.
  • Bottega’s growth was driven by the high desirability of leather goods and ready-to-wear collections
  • Despite short-term pressures in the last quarter, Kering is optimistic about recovering in 2024 due to upcoming elections.
  • LVMH says the same thing, where they are confident for continued growth in 2024.

2024 will look out to be a positive year for the apparel industry, especially print on demand as the elections are near. DTF and DTG will make numbers when campaign season for the elections are in. Take this to your shops biggest advantage and spark up revenue during this period. It is great that the elections are coming during the times when cotton prices are starting to abate. Well now, speaking of cotton..

Fiber Costs on a Tailwind

Sticky, sticky inflation are causing cotton prices to see a tailwind and though prices are not as it is in pre-covid times, it is still not as high as it was 2 years ago.

Cotton prices in the course of 5 years

“Cotton is still a slide — I just want to be clear that cotton still a slight headwind in the quarter, but again, vastly reduced. And that’s the key drivers that we see as I look at cotton over the last several years. It’s important to note that even today, cotton is still about 25% above pre-COVID levels. So it hasn’t gone down to pre-COVID levels. And I expect that, that with the best visibility that we have, that’s about a stable point for cotton.”

Jane Nielsen, CEO and COO of Ralph Lauren
  • This will also mean that most likely, your blank prices won’t go up much
  • Great news for you! Depending on your suppliers, you may find that the cost of blank materials falling into a much more budget-friendly range, positively impacting your profit margins.

And what about fleece?

Well, Gildan has predicted increased demand for fleece since last year and has been correct about it ever since. Now they are seeing ring spun T-shirts to be on the rise too. With both fleece and ring spun T-shirts showing double digit growth, Gildan has had a solid Q4 contributing to an overall 9% sales growth.

“We’ve seen drastic growth, as I was mentioning, double-digit growth before in fleece. That’s going to continue. And so it just shores up that base and we’ll continue to drive growth across the category.” – Chuck Ward, Gildan Executive

Chuck Ward, Sales President of Gildan
  • Gildan experienced 9% growth with activewear sales, up 8% and 11%, for hosiery and underwear sales.
  • As expected, the recovery in active wear was to specific types of activewear. Fleece and ring spun T-shirts!
  • They are anticipating growing demand for these materials in 2024, so you might want to consider printing on fleece products and ring spun T-shirts.
  • Gildan has also put in innovations on their core basics. Style 2000, Style 5000, 8000, and their fleece were mentioned to be given better features, better printability.
  • Keep an eye on these for inventory, as it could enhance your print quality!

They also have a positive outlook on underwear and hosiery. Even Hanesbrand is looking at a growth on innerwear in the US. It looks like a robust market for these categories in 2024, so you could dip your toes into it, if you haven’t already.

However, despite everything else, geopolitical tensions particularly in the Middle East, and across the Red Sea have also led to shipping disruptions, affecting costs and supply chain efficiency which may or may not affect your print shop’s operations. We’ll have to keep this on the lookout for the next quarter.

Oh No! Activewear, Not So Active

man beach jogging activewear

Activewear sales has seen better days in the US market. Even with a conservative outlook, numbers were not looking good. There’s been a noticeable drop in the number of people wanting to buy activewear. This decline in consumer interest or purchasing behavior means that continuing to produce more customised activewear would likely result in excess unsold inventory.

  • Hanesbrand is expecting activewear to be down roughly 30% in the first quarter.
  • Even Delta has reduced production levels to better align with the significantly reduced demand across the activewear industry.
  • Under Armour also experienced a downturn in revenue and they are working through some tough times with a plan to make its products more appealing and to connect better with customers.
  • So what is going on? Why are consumers not buying much activewear as we expected?
  • One thing we’re thinking its the weather! It seems like weather is extreme in most parts of the world. Particularly in the US, its either too hot, or too cold somewhere, affecting how consumers are buying these products.
  • Even the outerwear category for Ralph Lauren was challenging and due to the temperatures that were maybe a little milder than anyone would have liked.
  • Which is why more fleece and ring spun activewear are showing a good demand, it is to accommodate the weather better. Fleece for colder climates, and comfortable ring spun for hotter conditions.
  • Apart from weather, market saturation and brand preference are a huge contributor as to why Gildan, Hanesbrand and even Under Armour are not performing too well.
  • Because it looks like Lululemon, Nike and Adidas has still got it. From their last quarter performance, it seems like their fashion forward designs are the main moneymakers.
  • Lululemon as a leader on a relative basis, had an up in Y/Y revenue of 18.7% as it remains to be the top contender for activewear.
  • Of course, the better you look, the more you would want to flaunt it! Lululemon, Nike, Adidas has got all the right fit for this mindset, which is a logical explaination to why consumers prefer these brands more above the rest.
  • In the next few months, their revenue might spike higher as consumers work harder towards a healthier and much more active lifestyle for that “hot summer bod”.

For now, as a customised print shop owner, it looks like it is best to stay away from overstocking activewear. However, since Spring/Summer is coming, and a lot of outdoor activities will resume as usual, our advise is to follow in Gildan’s footsteps and focus printing on fleece and ring spun material for activewear specifically.

A lot of sporting events will start in April. The commencement of Major League Baseball (MLB) season, National Basketball Association (NBA) playoffs, and even Major League soccer will be starting soon too. This is definitely a huge opportunity to seize. Now is the ideal time to decide and put in the marketing strategies to bring in clients from the sports department.

While it’s important to cater to current trends, your print shop should also explore other growing segments such as casual wear, work-from-home attire, and eco-friendly products. Staying flexible and ready to pivot based on market demand can help maintain relevance and profitability.

Gen Z is the New Pink

Technological shifts are affecting demand of sales in everything. The decline in printer sales, attributed to digital advancement and reduced paper use, underscores the broader trend of technology shaping consumer demands and habits. A lot of companies are shifting their marketing strategies to focus on the PYTs. “Pretty Young Things” or more well known as the Gen Z, are contributing to a lot of digital foot traffic.

  • Tapestry gained around 2.5 million new customers in North America, and will be focusing on attracting the younger demographics.
  • The shift of consumer demographics directly affects how e-commerce continues to outpace in-store sales growth, reflecting a persistent shift towards online shopping, accelerated by the pandemic and changing consumer habits.
  • Ralph Lauren says that they are getting a lot of love globally and have big plans to keep growing, especially by attracting the younger shoppers.
  • Key campaigns and product launches helped to attract 1.7 million new consumers to the direct-to-consumer business, with significant engagement across social media platforms.
  • They’re also doing a lot with digital shopping and taking care of the planet, which people really like nowadays.
  • Companies like Kering are also adjusting to environmental crisis with a dual focus on nature and on climate.
  • Millenials and the younger crowd are more eco-conscious, so this approach will attract their interest more and enhance brand image.

If you’re trying to draw in the younger crowd, like these big brands, take into consideration on how you are building your online presence. Showcasing your brand as an eco-advocate could also be an advantage to build reputation among the younger folks.

Find out the current trends and interests of the younger audience. For example, you could always target to take orders from performing artists and print custom merchandise to be sold at concerts and events which will most likely be attended by these target market.

Leverage your print shop into this direction, as these people are the future and will help to make your business stay relevant in the industry for a much longer time.

Keep Calm and Keep it Simple

As our previous report have pointed out, Ralph Lauren has driven growth through their core products. In Q4, they are still reporting strong financial performance with top and bottom line results exceeding expectations.

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Ralph Lauren’s timeless designs contributing to their revenue
  • The brand’s timeless and desirable offerings have continued to attract consumers worldwide, supporting its pricing power in the market.
  • This is a ability they are using to leverage a broad powerful portfolio of core products that they can flex with evolving consumer needs.

“Consumers continue to turn to brands they know and trust and styles that live on beyond one season.”

Patrice Louvet, CEO of Ralph Lauren
  • Iconic core products, representing about 70% of the business, grew low double digits in the quarter, ahead of total company growth.
  • Under Armour also has reported that their consumers seems to like less logo visibility and styles that are quieter have pretty good demand.
  • Even Coach are seeing rapid and solid growth for their Tabby handbags, which is indeed a modern take on a classic silhouette, blending timeless elegance with contemporary style.
  • Consumers like it simple, they like it minimal, and they like it if it has no expiry date, proving that timeless designs will be more significant in the long run.

It looks like in order to thrive in the apparel industry, print shop owners should focus on strategic adaptability, customer engagement, and sustainable practices. With a growing consumer focus on environmental impact, print shops can benefit from incorporating sustainable practices into their operations. This includes using eco-friendly inks, sustainable fabrics, and minimizing waste. Offering a range of products that appeal to the environmentally conscious consumer can differentiate your brand in a crowded market. Additionally, creating a robust online presence through an intuitive e-commerce platform can help you reach a wider audience, especially the tech-savvy Gen Z demographic.

Digital advancements offer print shops unprecedented opportunities to streamline operations and enhance customer experience. Investing in high-quality digital printing technology can improve the efficiency and quality of your print operations. You might want to take the opportunity to invest in new equipment this year, as the economy is predicted to be bullish.

In other words, market is looking optimistic and since consumers will be willing to pay for luxury and quality, you will need to emphasise on the craftsmanship behind your products, whether it’s through the durability of the prints, the softness of the fabrics, or the precision of the designs. Whatever you decide to focus on, make sure your products stand out for their quality and justifies the price your customers are paying for.