OPINION: The story behind 2022’s US garment retail disaster

At this point, we are all aware of the current disaster facing US retail: How retailers 'bought, bought, bought', 'paid, paid, paid' and are now 'stuck, stuck, stuck' in a swamp of unsalable garments. We have reliable data from the US Government that imports during the period January to June 2022 rose by over 40% compared with the same period in 2021, which is a mindboggling increase. However, no one has explained what happened, and more importantly, why? We have been given data from a variety of sources — each with their own separate version of events —showing that garment retail sales declined (or not) during this same period: January to June 2022. We also have a great deal of anecdotal information that new garment orders have seriously declined. Regrettably, if we discount the conflicting data on garment retail sales and the many stories about declining orders, we are left only with the knowledge that US garment imports during this period have risen. We do not really know what the future will bring and how that as-of-yet unknown future will affect global garment factory suppliers. The US Government does publish detailed data on retail sales from garment and accessory retailers. Unfortunately, it does not include multi-product retailers such as Walmart and Target. Furthermore, the data is difficult to understand and even more difficult to put into a broader perspective. However, the data is accurate and has great value when trying to understand changes over time, which is of singular importance as a tool to understand the current problems. The following is a more detailed analysis based on the data offered by the US Government. Understanding the US garment retail sector's 2022 disaster To understand what has happened, we must go back to the period before the pandemic and analyse how garment retail sales change in “normal” times. For this we select the period 2017-2019. The graphs below all follow the same pattern. We are comparing changes in retail sales by comparing in one month with sales during the same month in the previous year. The data is shown in two ways: Percent change in sales (lines) Polynomial trend (dotted lines) As we can see from the graph below, changes during normal periods are relatively small. In 2018, at the bottom we see that January sales declined by -0.85% and at the top May increased by 5.64% compared with the same period in 2017. We can also see the same magnitude of change when we compare 2019 with 2018: The bottom in November -1.54% and the top in December 4.59%. 2020, on the other hand, was the period when the pandemic resulted in lockdowns. This was a period of collapse. As we can see from the graph below, the low point was reached in April with a decline of -87.27% compared with the peak in January of 3.76%. Clearly January-February was a holdover of the good old days of 2019. As we move closer to the present, we can see that 2021 was a period of recovery. As we can see from the graph below retails sales peaked in April with an increase of a staggering 739.85% compared with a low point in January of -12.45%. Once again, clearly a holdover of the bad old days of 2020. It is clear from the data that US retailers believed the terrible days of 2020 were at an end and that henceforth garment sales would return to the “normal” pattern of the pre-pandemic period. Unfortunately, as we can see from the graph below, this proved not to be the case. Retail sales peaked in February with an increase of 28.02%. Yet again, clearly a holdover from the good old days of 2021, then fell each month until reaching a decline of -0.25% in June. As we can see from the chart below, the data fits together so well that you might well believe that it was all a made-up piece of fiction. Regrettably made-up data has become all too common. Under the circumstances, I suggest you visit the source - the official census website Sales from Garment and Accessory retailers 2017 - YTD June 2022 0102030405060708091011122018-0.85%3.48%-0.20%1.71%5.64%2.24%4.98%1.92%1.10%3.52%2.47%1.91%20191.38%-1.14%3.62%1.56%-2.65%-0.40%-0.59%1.74%1.23%-0.63%-1.54%4.59%20203.76%2.44%-49.14%-87.27%-62.69%-22.68%-20.63%-18.64%-6.92%-9.43%-14.28%-13.87%2021-8.33%-12.45%109.28%739.85%200.18%50.70%40.89%35.98%23.57%25.53%35.58%25.21%202219.28%28.02%7.69%8.67%3.97%-0.25% All of this leads us to those great unanswered questions about the US garment retail disaster: What happened? Retail sales in the first six months increased - why not garments? Clearly there are other factors involved, which senior management has yet to recognise. Until retail management has a better understanding of these underlying factors governing our industry, they will continue on the current road of poor and costly decisions. Earlier this year Birnbaum discussed how changes to the way the global garment industry operates have markedly altered the effects of free on board (FOB) prices on garment costs.