The Consumer Price Index recently revealed that apparel prices have climbed approximately 2% in January which accounts for about 3% of the overall consumer price index. This percentage increase has been marked as the highest increase since 1990. The news comes after many retailers celebrated a strong holiday season, leaving them with better inventory levels and less of a need to hold flash sales and offer deep discounts at the start of 2018.
Apparel prices have been in a deflationary cycle for many years, as companies have been pressured to increase promotions to move merchandise off the floor. But that appears to be changing. So far this year, retailers “didn’t have to go through fire sale prices to get rid of this stuff, so they’ve been able to maintain more of a price integrity stance,” Customer Growth Partners President and Founder Craig Johnson told CNBC.
Lastly, there has been “a rebound in some of the up-market apparel retailers,” Johnson said. There has been a stronger performance from luxury brands, you get higher price points that are selling…and that moves up the nominal price point for apparel. Winter brands like Moncler and Canada Goose have been seeing amazing sales as many snow storms have appeared recently. Other luxury retailers like Coach and Michael Kors have reported stronger earnings and are optimistic about the fiscal year for 2018. Merchandise that won’t be sold will eventually end up in the hands of off-price companies with a marked down price.
If you are considering expanding or opening more retail locations this year, let us know. We’d love to send you a proposal!