With 2018's first quarter now in the rear view mirror, adaptation has been this year's central theme in the apparel sector. Facing complex challenges to their long-term success (and in some cases, survival), apparel brands and retailers have embarked on an urgent mission to redefine their value propositions for an increasingly demanding consumer. Brands are applying new tools and techniques to become more collaborative, nimble and engaged with their consumer. Retailers have invested heavily in technology and innovation, increasing next-generation store layouts in an effort to provide vibrant experiences that are now a prerequisite for discerning millennial consumers. Artificial intelligence and virtual reality, once solely futuristic cinema fodder, are increasingly used to enhance both customer acquisition and customer conversion. It is truly a "brave new world" out there!

While e-commerce (led by Amazon) and an increasingly acquisitive, innovative Walmart continue to gain share on traditional brick-and-mortar retail, hints of optimism have emerged within the sector. Several retailers recently announced new store openings for the remainder of the year, while many increased earnings targets. With an eye toward sustainable expansion, companies are adopting smaller store formats that blend the benefits of a physical retail presence with enhanced digital capabilities, particularly by optimizing inventory levels. Increased vacancies largely due to the continued decline of traditional retail concepts, will also create momentum for further specialty retail expansion.

On a macro level, volatility seems to be the new normal. Concerns over rising interest rates, inflation and the impact of ongoing U.S. trade-related negotiations could certainly impact performance. Owners and executives must maintain a keen eye on these factors and potential effects on their brands and companies. Thus, the need for adaptation whether expanding consumer engagement, augmenting sales channels or modifying sourcing relationships has become a significant long-term trend in the sector.

Our Quarterly Apparel Report aims to identify trends and provide insights across the apparel sector, including in-depth analysis of the global industry, focusing on key themes, issues and opportunities. We hope you continue to find this report and its future editions to be a useful source of information.


Apparel Quarterly Update Spring 2018 from Duff & Phelps

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