Supply chain management, virtual and augmented reality, and unsurprisingly, Covid-19 are among the top ten major themes set to impact the apparel sector in 2022, new research from GlobalData shows.
Utilising its thematic research ecosystem, GlobalData pinpoints the ten themes in its latest thematic research report for the sector, ‘Top 10 Themes in Apparel 2022’.
The study highlights themes including supply chain management, geopolitics, ESG – environmental, virtual and augmented reality, ESG – social, e-commerce, Covid-19, digital media, mobile, and the future of work as the major themes impacting the apparel sector in the remainder of the year. It also offers a series of predictions and identifies winners and losers in the space.
Supply chain management
Supply chains were top of mind last year amid the closure of ports and factories in China which led to both manufacturing and logistical delays. This only pushed up shipping times and costs, especially from East Asia to North America, with some retailers such as Lululemon and Old Navy resorting to using air freight to help increase stock levels for the golden quarter.
Looking ahead, the apparel supply chain is facing more disruption from Russia’s invasion of Ukraine with the resultant hikes in oil, gas, and energy prices expected to trigger higher costs for retailers using petroleum-based materials, as well as increased costs of operating across supply chains.
While sophisticated supply chain management solutions have emerged in recent years, amid such severe disruption these systems can only do so much, the report authors note. One trend becoming popular among apparel players to reduce the impacts of these shocks is nearshoring and/or re-shoring, but manufacturing goods in the market they are to be sold in will have limited effects if raw materials still need to be shipped from elsewhere.
Looking to the theme of geopoliticals, a number of trends have affected economies in the past ten years, with the conflict in Ukraine continuing to unfold. GlobalData says the implications for the apparel industry will be complex due to the intricacies of global supply chains, and such destabilisation creates additional pressures.
Beyond this conflict, China has emerged as a superpower, disrupting the status quo, and others such as India and Brazil are rapidly growing and will challenge the traditional major economies.
ESG – Environmental
As consumers’ interest in sustainability, the pressure on apparel brands and retailers to deliver alternatives to new clothing continues to grow. The area that this manifests in the most is the increased interest in purchasing secondhand and renting clothing and footwear, with resale platforms such as Vinted and Depop booming in popularity.
GlobalData notes action in the apparel industry has so far mostly been concentrated on using a proportion of “better” materials, such as recycled instead of virgin polyester, and organic cotton. In 2022, consumer awareness and retailer actions will encompass more aspects of the environment, such as water reduction in material production and carbon emissions from transportation, it notes.
Virtual and augmented reality
An increasing number of brands are venturing into the metaverse, with new technological developments opening doors to significant commercial potential. Brands are currently experimenting with virtual apparel through augmented and virtual reality, gamification, and Non-Fungible Tokens (NFTs).
While luxury and sports brands are well-positioned to succeed in the
metaverse, this does not mean mass market and value players cannot be
successful under this theme but the path will be harder. Consumers are more
likely to buy a metaverse product from brands they engage with in real life, so
it is crucial for these brands to have a strong product offer in the physical
world before trialing metaverse projects, GlobalData says.
It warns, however, apparel brands must be aware of the lack of regulation among intellectual property in this relatively new market, and the issues this creates.
ESG – Social
Shoppers are also becoming more aware of the social implications of the apparel industry, with criticism centred around the treatment of garment workers producing items for fast fashion brands. This is something investors are starting to consider and consumers are becoming less willing to accept the complexities of apparel supply chains and traceability as an excuse.
Retailers have also become more involved in other social issues, such as against racism, being more inclusive in terms of their products and imagery, and promoting female empowerment. However, fashion firms must take such actions carefully as consumers, especially Gen Z, are willing to call out those that are performative, the report states.
Meanwhile, online demand is expected to remain strong post-pandemic, with online penetration forecast to increase to 35% in 2025, with a 41% rise in sales from 2022 to 2025.
In 2022, GlobalData expects the impacts of the virus will lessen but still be present, allowing consumers to start behaving more normally, including
going back to the office and to more social events, boosting demand for apparel.
It adds with consumers used to working from home and most likely to never
return to an office full time, wardrobes will become increasingly casual.
Purchasing via social channels is expected to become more common especially as online shopping continues to grow amid declines in physical retail footfall.
Online pureplays targeting young consumers, such as the Boohoo Group, Gymshark, and Shein have proven social media to be an effective marketing tool to drive growth, GlobalData notes.
It also points to live streaming, already a prominent way to sell products in China, with a few retailers such as Marks & Spencer and H&M having trialled it in Europe and North America.
As consumers increasingly spend more time on mobiles, and functionality continually develops, the use of mobiles for retail browsing and purchase will catch up with, and possibly, overtake laptops or computers.
Easy to use and engaging apps, mobile-optimised websites, and a social media-focused marketing strategy are imperative to encourage shopper loyalty and drive impulse buys.
The future of work
The pandemic has greatly affected consumers’ world of work, with hybrid working set to become the norm in 2022 and beyond.
Post-Covid, looking to the theme of the future of work, the office will look very different, with some employees becoming permanent home workers, thus impacting the distribution of where people work and as such, where they shop. City centre locations will suffer from dampened footfall in the long term, with neighbourhood and easy-to-access locations such as retail parks benefitting.
Working from home will also change online shopping habits, with a shift to
home delivery instead of click & collect and third-party pickup, increasing
costs for retailers and carbon emissions from last mile delivery.
By Just Style