The apparel industry is changing at a pace far surpassing previous decades, moving from the product era to the consumer era to the information era. At this pace, apparel companies are challenged to respond to consumer demands and spending patterns.
To remain competitive and stimulate growth, apparel companies must embrace a marketplace that develops technology so quickly it becomes obsolete within months. This means understanding both the changing retail environment and the shift to the direct-to-consumer model.
TOP 10 RETAIL TRENDS
To remain competitive, it’s important to understand industry trends beyond apparel and how they might affect how you conduct business. The retail industry’s top 10 trends in 2017:
• Influencers. Don’t underestimate social media influence, which results in $2.2 trillion retail dollars. (According to EMarketer)
• Personalization. Customization of a product or service to meet the needs of an individual increases sales, which creates loyal consumers.
• Generation Z. This generation wields more than $44 billion in buying power and demands transaction speed and brand engagement. (According to Uniquely Generation Z Report)
• Mobile. The mobile customer has seven distinct needs: price, inventory, review and advice, personalization, store guidance, checkout, and loyalty.
• Direct to consumer (DTC). With this paradigm shift toward a model that today’s consumer prefers, there’ve already been hundreds of store closures, and the number of retailers filing for Chapter 11 bankruptcy protection is heading toward its highest annual tally since the Great Recession. (According to CNBC)
• Brick and mortar. Pressured by the DTC model, savvy brands and stores will need to use technology to add value to the customer experience and keep the doors open.
• Big data. There’s an incredible amount of consumer data available, and retailers that collect and analyze it have a stronger understanding of their customers.
• Cybersecurity. Retailers that invest large amounts of capital in protecting their data need an educated human firewall to successfully implement and maintain expensive technological security measures.
Tax and Compliance
• Border adjustment tax. Although unlikely, if passed as part of the Trump administration’s tax bill, retailers will be affected via proposed tax breaks on US exporters and additional taxes on US importers.
• Lease accounting update. Be prepared to invest time and resources to navigate reporting requirements, which will become effective in fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.
An accounting professional can help you better understand how your apparel company’s growth strategies fit into a competitive marketplace and fast-changing retail environment.
Martin Hughes, Partner at Moss Adams, has practiced public accounting since 1982. He serves as the national practice leader for the Apparel Practice at Moss Adams and provides assurance and consulting services to privately held and public middle-market clients in the apparel and manufacturing and distribution industries. He can be reached at (310) 295- 3816 or via firstname.lastname@example.org.
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