Who’s apparel’s belle of the ball?
The US apparel industry’s navigated multiple layers from sustainability, racism, stockpiled inventory to supply chain woes and experiencing shrinking profits since Covid hit. But is the Fed’s latest stitch-up fashion’s final blow? 🧵 In trying to treat the US economy with kid gloves - sending US$16 trillion down the runway between January 2020 and October 2021 (80% of all US dollars in existence), the Federal Reserve may have been caught with their pants down. So they’ve stitched together a new plan: fighting 2022’s predicted possible seven inflation hikes by raising interest rates, already labelled ‘rate-hike-palooza’ by Wall Street’s top drawer… what the? Investors are getting hot under the collar following last year’s growth stock sell-off, and not all fashion brands are voguing.
The global apparel market is worth US$1.9 trillion, and the US, US$215.7 billion. Back in 2020, clothing brands were all dressed up with nowhere to go. While the unaffected wealthy kept luxury brands in business, and discount brands like TJX (TJX) rallied (up 96% since their March 2020 slump), mid-range apparel fell out of fashion with consumers and investors. While teen retailer American Eagle’s (AEO) share price has risen 59% since February 2020, iconic US brands Guess (GES), The Gap (GPS), Burlington Stores (BURL), Ralph Lauren (RL), Under Armour (UAA) and Levi’s (LEVI), and online retailers Stitch Fix (SFIX) and Farfetch (FTCH), have dropped and risen like hemlines through the centuries, and are now just hovering around their pre-pandemic levels.
Yet our love for athleisure wear continues its comfortable run, seeing Lululemon (LULU) stretching 31% above pre-Covid values and Nike (NKE) jumping up 43% despite public supply chain issues. But McKinsey expects US consumers with ‘pent-up demand’ for new threads will ditch loungewear in 2022, and new fashion retail tech, like augmented reality, will be a runway success. Also rising are cover stars Kim K and Rihanna. Their fashion forays both landed megawatt series B and C funding rounds, seeing the latter strut her stuff with two-year-old Skims now valued at an Instagram-worthy US$3.2 billion - US$2 billion more than Spanx. One day you’re in, and the next, you’re out. 🤷♀️
From baby-bust to baby-boom?
Is there a new baby boom brewing? 👶 According to a report from Bank of America, there are signs that millennials could be preparing to swap Netflix ‘n’ chill for nappies ‘n’ children in 2022. According to the report, in the first half of 2021, sales of pregnancy tests in the US jumped 13%, while there was also an 11% rise in the number of people who said they were hoping to welcome a new tiger cub into the world this year.
That could be good news for retailers who sell baby products like Walmart (WMT), Target (TGT) and Costco (COST). However, the swell might just be catching up from the baby-bust seen at the start of the pandemic. 🤰 Yep, despite the world being stuck at home looking for ways to keep hands busy, in 2020 the US birth rate fell by 4%, hitting a record low. It was a stressful year, after all. After years of a pregnant pause, the boom may just be a baby bump for US population growth, which nearly flatlined in 2021.
Fur babies are booming too! 🐱🐶
Instead, we’ve been showing love to our fur babies, creating a pandemic pet boom. There are around nine million new pets in the US since the start of the pandemic and the Pope is NOT happy about it. But pet owners probably are. Between regular walkies and the company of furry friends, pet people in general say their Luna and Charlies have had a positive impact on their wellbeing through the pandemic. It’s also good news for online pet retailer Chewy (CHWY), which called out the benefit of increased pet ownership in its latest quarterly earnings results.
Is your car your new wallet?
Payments might make the world go around, but right now, most of us still give a suspicious side-eye to the EFTPOS pin-pad at the supermarket checkout. 👀 It’s a pandemic! Who knows where that thing’s been? Fortunately, the future of payments is looking increasingly contactless. Last week, Mastercard (MA) reported that contactless payments now comprise half of their global in-person transactions, up from one-third pre-pandemic.
But the true future of contactless payments could lie in the billions of smartphones worldwide rapidly turning into their own mobile payment terminals. 📱 Visa’s (V) Tap to Phone and Mastercard’s Tap on Phone systems have already started rolling out, but the latest player in the contactless payments space could be none other than tech titan Apple (AAPL). According to Bloomberg, Apple iPhones could soon turn into mobile payment terminals too, paving the way for small businesses to take contactless payments without any extra hardware.
Why stop at phones? Ford (F) has big plans to give our wallets some wheels by partnering with payments processing company Stripe and turning cars into mobile wallets. Not only will the deal let Ford take online orders for their hot new electric F150 Lightning truck, but it may also enable instant automatic payments at charging stations. That’s right; the car is a wallet now.
Not to be outdone, Mastercard has teamed up with Coinbase (COIN) to cash in on the US$41 billion market for Non-Fungible Tokens (NFTs). The collab will let people go ape on Coinbase’s upcoming NFT marketplace and give them a way to buy their favourite jpeg image of a monkey without even needing a crypto-currency wallet. 🍌