Americans are ready to replenish their wardrobe, but shipping snafus can plague retailers

Some of us say “so long” to sweatpants.

In the last week of February, seven of the ten top-selling items on the Anthropologie website were dresses, the company, a division of Urban Outfitters, said during a revenue conference call this week. Until then, it said, it was fortunate that only one or two dresses made it into the top 10 list.

Urban Outfitters CEO Richard Hayne called the change a striking and very positive one.

“Until recently, the fashion was mostly … casual and comfortable,” said Hayne. “We’re starting to see – what I call ‘nightlife fashion’ is starting to hold. The apparel industry will be changing in terms of the categories we sell.”

According to market researcher The NPD Group, clothing sales fell 19% last year as Americans stayed at home and concentrated their spending on groceries and other household necessities.

When shoppers bought clothing, comfort was the theme: sales of joggers were up 17% year over year and nightwear sales were up 6%, NPD said. Fashion footwear, down 27% this year, saw sales of slippers up 21% while consumers shuffled from cooking in the kitchen to holding video conferences from the bedroom to streaming the latest series from the sofa in the living room.

Retailers such as Urban, Gap, Abercrombie & Fitch, Macy’s and Nordstrom had to turn their wares quickly when the lifestyle changed abruptly last spring. They donned blazers, skirts and slim-fitting pants from mannequins, to be replaced by stretchy joggers and roomy pajamas.

But rollout of the Covid vaccine has ramped up rapidly in recent weeks, with the US now receiving an average of 2 million vaccine doses per day. At the same time, the number of reported cases is decreasing. Encouraged by the positive trends, a wave of states has relaxed Covid restrictions – opening up the possibility of people going to a restaurant or going to the cinema for an evening. That means many Americans are going to dig in their closets looking for something new to put on.

It’s time for retailers to turn around again. However, that will not be easy. Businesses continue to face congested U.S. ports and container shortages, with merchandise backlogs that make inventory shelves with new outfits all the more complicated. Management teams said shipping delays range from three to four weeks and come with higher transportation costs.

“Historical volumes, social distance measures between workers and a shortage of drivers to transport goods away are causing congestion and significant delays in lead times,” said Wells Fargo analyst Ike Boruchow.

Department store chain Macy’s has said it has a plan to quickly replenish work and formal attire as customers begin to resume more normal operations. Many analysts are betting on a major turnaround in shopping behavior.

“People have money in their pockets, they’re sick of equity, and you’re going to see an explosion of feel-good buys,” said Stacey Widlitz, president of SW Retail Advisors. “The weather is turning and people feel positive when they go out again – or even sit in the park in a dress.”

“The nature of people is they want to feel good,” she added. “They want to feel fresh – especially for the younger generations. It’s your entry price for fun again.”

Retailers are already seizing on this message. Kohl’s website proclaims “The Great Refresh”, while Banana Republic praises a “Spring Awakening”. Men’s suit maker Suit Supply’s new ad campaign, referring to a “New Normal,” went viral on social media this week.

Others still hedge their bets, anticipate continued momentum with comfortable, lounge wear in 2021. Some consumers will likely want to stick to a more casual wardrobe – one they have become accustomed to over the past 12 months. In turn, companies may choose to relax office dress codes as their staff return.

Nordstrom continues to post “Work-from-Anywhere Style” on its website home page. Rent the Runway keeps a portion of its mobile app for “Entertaining at Home” outfits.

Tween-and-teen apparel retailer American Eagle said earlier this week that it expects its current quarter sales to be the strongest in three years, depending on the growth of its Aerie brand, which sells work-from-home options such as yoga pants. sports bras, pajamas and lingerie.

Scott Baxter, CEO of Kontoor Brands, told CNBC that jeans are making a comeback as Americans are looking for a way to dress, but a little more than at home. Kontoor’s brands include denim-focused labels Wrangler and Lee.

“Denim is casual, it’s easy … you can dress it up, you can dress it up,” Baxter said in an interview earlier this week. “When people go back to the office, people think about how they are going to dress, and denim seems to be the choice.”

But retailers don’t just have to worry that demand for clothing will return. They’ve had logistical headaches during much of the pandemic. And they don’t seem to be diminishing, making planning for the spring, summer and school seasons even more difficult.

Nordstrom noted that shipping delays prevented some of its holiday items from reaching shelves and warehouses on time, negatively impacting its fourth quarter results. It still works by selling that inventory, the company told analysts earlier this week, and hopes to be back to normal inventory levels by the second quarter.

Gap also noted on Thursday, when reporting mixed fourth-quarter results, that port congestion is expected to continue in the first half of the year. That will result in increased inventory levels in the second quarter, Gap said.

For Urban, the bigger problem today is getting access to containers to ship goods, Chief Operating Officer Frank Conforti explained earlier this week.

“Although, yes, the ports are definitely in congestion, especially on the west coast … and we see delays in ports anywhere from two to seven days, the bigger challenge actually lies with the incoming ships, with plenty of containers. Asia to bring in the product, ” said Conforti.

The limited availability of truck drivers to transport goods from retailers across the country remains another issue, Telsey Advisory Group CEO and Chief Research Officer Dana Telsey said in an interview Thursday with CNBC’s Sara Eisen.

Companies will likely not sort their supplies until after the school season starts to meet customer demand, she said. But, like Widlitz, Telsey doesn’t think shoppers will be returning to stores for a new look anytime soon.

“We haven’t released clothes in over a year,” Telsey said. “I think [people] want to freshen up their wardrobes. “