Spring/Summer 2022 – What EDITED Got Right & Wrong

For the first half of 2022, EDITED’s in-house Analysts produced over 680 reports. These give the world’s leading retailers data-backed analysis on the most important industry happenings and hottest trends.

Revisiting our wealth of resources, this report investigates how EDITED insights transpired in the market for the first half of the year against the challenging socioeconomic backdrop. 

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Key Takeaways

• As outlined by EDITED, the free returns model is no longer sustainable, with more major brands introducing fees. Return rates grew 4pp annually, impacting retailers’ bottom lines and environmental footprints.

• Despite the revenge spending phenomenon, brands face excessive stock levels as high returns and inflation led to a 3pp increase in unsold inventory at the end of June.

• It was expected that retailers would take a more restrained approach to discounts to protect margins as the cost of raw materials elevated. However, this did not pan out. The proportion of discounts steadily increased in the US in Q2, leading to a four-year high in June of 61%.

• Preppy, Y2K and Balletcore were winning product trends as forecasted. However, Bikercore for menswear, puffy sleeves for womenswear and cargo pants for kids did not enjoy the same levels of success, all experiencing steep markdowns by end of season.

• The industry continued to be affected by challenges outside brands’ control, with war, looming recession and continued COVID challenges impacting H1 trade. Amid the volatile landscape, it is essential to invest in retail analytics to make more informed decisions at scale.

Customer Behavior

Charging for returns

Our report exploring consumer behavior stated that other major players would follow Zara’s polarizing decision to charge customers for returns. boohoo is the latest to withdraw free returns, encouraging consumers to make more mindful purchases. While this may put other fast fashion competitors in a more favorable position, H1 return rates climbed 4pp annually. This trend is anticipated to continue as retailers are the cost of living crisis makes consumers more selective about what purchases they keep. 

Revenge spending didn’t cancel out rising inventory levels

Despite the looming recession, optimistic metrics pointed to the revenge spending phenomenon. Customers flocked to Europe and growth in “going out out” product sell outs over the summer was noted. Inflation led to average order values increasing 9% YoY, indicating that increased price tags hadn’t deterred consumer spending. However, the percentage of orders placed with promotions also rose 8pp YoY, impacting retailer profitability. Plus, with the aforementioned influx of returns, retailers closed the first half of the year with a glut of unsold inventory, up 3pp annually. This will add to the challenge of moving through goods in winter when consumers are expected to be even more frugal with discretionary spending as heating and energy bills soar.

Calvin Klein Email US – May 24, 2022 & Bershka US Email – Mar 3, 2022

Pricing & Discounting

Bra prices were pushed up

EDITED highlighted an opportunity to elevate T-shirts bra prices as the majority stocked between November to February were retailing between the $10-$20 and $30-$40 thresholds, though 41% of sell outs were between 50%-60%. By the end of Q2, 37% of US T-shirt bras were priced at $40-50, while the 10-20% range diminished to 10% of stocked options. Meanwhile, in the UK, £20-30 became the most popular interval, up from £10-20.

Discounts weren’t pared back

It was expected that retailers would take a more conservative approach to discounts to help combat rising costs and preserve margins in the aftermath of peak pandemic promotions. This wasn’t always the case, especially in Q2 when US retailers discounted more products at a deeper average rate compared to last year and the proportion of June assortments reduced reached a four-year high of 61%.

 

Menswear Trends

A+ For Preppy 2.0

Hailed by our Analyst Team as one of menswear’s defining trends of 2022, prepleisure resonated with consumers throughout the summer selling period, fueled by Golfcore and Tenniscore subcultures. Annual investments in polo shirts increased by 20% in the US1 and 18% in the UK2 outselling T-shirts. US sales for varsity jackets grew by 17% compared to Spring/Summer 2021.

Bikercore Stalled

Though a successful womenswear trend and leather’s anticipated year-round appeal, investment in biker jackets for menswear reached an all time low, while sell outs were stagnant. June closed with 85% of styles discounted vs. 49% a year ago. To shift remaining stock, reposition stand-up collar styles, tapping into the rising interest in F1 influences.

Images via Pull&Bear & Zara

 

Womenswear Trends

The Millennium Bug is still viral

EDITED has been directing retailers towards Y2K trends since 2019. Throughout Spring/Summer 2022, products nodding to the early and mid-aughts continued to be lucrative for the brands that invested. Cargo pants were the hero piece, with new styles driving 416% higher majority SKU sell outs YoY. In the UK, tank tops were a success story, noting an increase in newness by 6% and pricing by 18% vs. SS21. Micro mini skirts resonated with stateside customers, registering a 15% increase on 2021.

Puff sleeves failed to blow up

Consumers binge-watched the second season of Bridgerton, but they were less interested in the Regencycore detail this time around. US retailers scaled back puff sleeve tops and dresses by 33% YoY, while market-wide majority SKU sell outs tumbled 13% YoY. By the end of the season, 62% of blouses with this feature were saddled with an average discount of 38%. 

 
Images via H&M & River Island

 

Childrenswear Trends

Balletcore was on Pointe

Earlier this year, EDITED predicted the hyper-feminine subculture would influence trends in the girlswear market. This was proven at UK retailers especially, where tulle skirts and flared leggings emerged as top moving spring/summer styles.5 Across both regions, childrenswear products using the descriptor “ballet” noted a 20% uptick in newness vs. SS21.

Cargo’s a no-go

Though a hit for womenswear and menswear, the utility staple had a sluggish summer in childrenswear. By the end of the season, over half of new cargo pants and shorts were marked down across markets at an average rate of 40%. In the US, camouflage was one of the slowest moving prints in boyswear.

 
Images via Marks & Spencer & Gap

 

Macro Factors

Russia-Ukraine war

The global market’s reliance on Russian resources added to inflation, with sanctions imposed after the invasion of Ukraine. While gas, energy and food prices were hit first, fashion’s already-climbing price tags will continue to be impacted. The war could also potentially be a catalyst for the decline of globalization, leading to added embargoes across other nations, resulting in further shipping headwinds, reduced delivery times and limitations on region-specific materials in the long term.

Impending global recession

After two years of COVID-related challenges, the industry expected a more optimistic year of trade in 2022. However, the soaring oil prices as mentioned above, coupled with low unemployment and the cost of living crisis, have retailers braced for a recession. As outlined in our Playbook of Trading in a Recession, this underscores the importance of expanding entry-level categories or, where possible, keeping prices stable going forward, as well as being strategic with markdowns to protect margins.

Living with COVID

The first half of 2022 saw lockdowns in China disrupt global supply chains, with brands feeling the impact of added freight costs, factory shutdowns and the absence of the luxury consumer. Cases are continuing to climb even with vaccinations and reopenings. Retailers must factor into their strategies that COVID will still play a role in the predicted “post-pandemic” economy.