How COVID has inflated fashion prices

We've previously reported on COVID causing luxury designers to inflate their prices. Now looking through the lens of mass market fashion, we use data to back up how category prices have evolved as retailers shift their strategies amid the next normal.

As retailers navigate the next phase of pandemic trading, they'll need to understand how pricing structures have been disrupted to ensure they're aligned to competitors, as well as to spot opportunities and maximize profitability within their ranges.

EDITED’s key takeaways

• To command stronger margins, consider elevating the prices of successful styles that continue to resonate with consumers post-pandemic. Retailers have already raised the prices of products that fit within lifestyle movements. Within athleisure, men's sneakers and women's leggings prices have increased, while the growing Gorpcore trend has propelled prices for functional outerwear styles and shorts.
  
  
• With retailers elevating loungewear to carry the category outside of lockdowns, premium prices have been attached to sweatpants, hoodies and sweatshirts. Despite this, prices for jeans in the UK are up YoY - evident of denim's comeback.
  
  
• As casualization continues to underpin successful trends, suit jackets and court shoes haven't returned to pre-pandemic price points. However, pent-up demand for going out has bolstered the average price of bodycon, midi and cami dresses as retailers reposition to capture spending from consumers dressing up for lost time.

Economic shifts

While the uncertainty surrounding COVID may have led shoppers to be more frugal with their spending, vaccine rollouts have helped reboot consumer confidence. In Q1, US consumers recorded the largest ever jump in disposable income. The British economy is reportedly growing at its fastest pace in 80 years and is forecasted to bounce back to pre-pandemic levels by the end of the year.

The pandemic deemed fashion as a non-essential category. However, demand for newness surged as shopping habits return to normalcy, leading to the consumer price index swelling 5.4% in June. Women's US apparel rose 1.6% compared to May and footwear up 7% - the sharpest uptick in over 30 years. Several luxury brands are reporting a rebound, partly owed to price inflation. EDITED recently recorded a 13% rise in luxury prices YoY.

Tops pricing

Menswear

Zoom-friendly dressing contributed to top's success, which has continued into the vaccine era now consumers' wardrobes can become more expansive. Catering to pent-up demand for a transition out of the home wardrobe is evident by cardigan and sweater price increases. However, as premium loungewear becomes a mainstay through organic fabrics and high-profile collaborations, pricing for hoodies and sweatshirts have also spiked.

UK tops outpace pre-pandemic prices in T-shirts and polo shirts as retailers capitalize on the success of prepleisure sporting trends such as golf and tenniscore. In contrast, shirt prices are at a two-year low, with an average price drop recorded at Bershka, Fat Face and Gap. Overall average pricing for loungewear stalwarts hoodies and sweatshirts hasn't returned to 2019 levels, but is higher than 2020 in the trend's heydey.

Womenswear

Y2K essentials including tanks and cami tops are either the same or more affordable than in 2019 as US retailers gear their womenswear assortments towards Gen Z. The pricing on all other analyzed styles has inflated compared to the past two years. Knitwear's emergence as the new loungewear has led to price increases in cardigans and sweaters at Banana Republic, J.Crew and EXPRESS.

With opposing silhouettes of oversized lounge styles and micro-cropped fits trending in the summer for UK tops, retailers elevated their prices of all key items to command stronger margins. As casualization has proven to go beyond a fleeting pandemic trend, hoodies and sweatshirts are retailing at higher prices at River Island and Zara, while & Other Stories has grown its basic tees pricing.

Bottoms pricing

Trumped by the demand for tops, bottoms are all operating in lower price thresholds than in 2019 and 2020. Sweatpants and shorts are exceptions, with retailers raising their average prices as comfort and functionality remain an overarching trend for summer. Retailers that priced up Gorpcore-style technical shorts, jogging shorts and Bermudas reaped the rewards - these were top moving trends.

Similarly, the pricing for bottoms in the UK fell, with sweatpants the only products that maintained its average price vs. 2019. As the pandemic caused retailers to position denim as a core basic, the price tag must match. Jeans are more expensive on average than last year, yet more affordable than 2019. Uniqlo and Weekday have priced men's jeans above 2020, while Zara is lower.

Womenswear

In 2019, trousers were more expensive than jeans. WFH culture and denim's post-pandemic comeback increased demand for the wardrobe staple. While still priced below previous years, jeans now have a more premium price tag than more formal slacks. An already-profitable category, activewear's success led retailers like American Eagle Outfitters, Loft and Mango to raise the price of leggings.

The average prices for opposing categories, sweatpants and jeans, are at a two-year high in the UK. With comfort underpinning the top-performing trends, operating in a higher price threshold for tactile fabrics and baggy, 90s-inspired fits would benefit retailers' bottom lines. Meanwhile, skirt prices are more conservative as shorts swell, buoyed by the success of terry toweling and Bermuda styles.

Outerwear pricing

Menswear

The overall average price points in the US dropped significantly as newness in outerwear flooded the market. With COVID leading to formal silhouettes warranting steep discounts, the prices of blazers and suit jackets have contracted. Retailers protected their margins by pricing up functional styles like bikers, windbreakers and bomber jackets, the latter of which saw double-digit sell out rates across both regions.

A strong measure of Gorpcore's success, the average prices of new gilets, shackets and windbreakers are at a two-year high, indicating retailers can up their prices for styles with technical features. While suit jacket pricing has dropped off in this region too, its more casual counterpart, the blazer, has seen a rise. Uniqlo and boohooMAN have both elevated their blazer prices as styles rooted in comfort drive sell out activity.

Womenswear

While knitwear prices have ballooned with retailers investing in premium products, outerwear has taken a hit. Though several categories are priced above 2020, they are still more accessible than in 2019. For spring/summer drops, bombers stood out as an exception, with new styles at Zara sitting above pre-pandemic prices as well as windbreakers, which have seen investment at Mango and H&M.

Women's outerwear prices had more of an upwards trajectory in the UK. Shackets and trenchcoats emerged as cash cows, helping drive outerwear's increase in sell outs, and experiencing a price lift upwards of £7.00 YoY. In contrast to the US, blazer pricing is experiencing a post-pandemic revival - Monki, Uniqlo and Zara have all beefed up their average prices as demand continues to soar.