Clothing stores fight back amid pandemic

The pandemic has made for an extremely difficult environment when it comes to selling clothes. With no parties on the calendar, no meetings to attend and no vacations in the offing, shoppers have had little reason to go on a spree for new outfits, and the enticement of hunting the racks for something new has simply evaporated. As a result, data from the Commerce Department shows that clothing stores’ Covid sales slump has been the worst of any format in retail — even restaurants.
A wide variety of clothing-centric retailers reported sinking sales in the latest batch of quarterly earnings reports, from traditional department stores to specialty chains and even online upstarts. Now, many are trying to plot a way back. Here’s a rundown of some of the ways different types of clothing sellers are coping in the face of what Kohl’s Corp. CEO Michelle Gass called “the worst retail environment in our nearly 60-year history,” and my assessment of how likely such efforts will help:
TJX Cos, the off-price juggernaut: TJX has been among the best-performing clothing retailers in the US for years now, enjoying steady sales growth despite mostly staying out of the e-commerce fray. The decision to shun digital formats is being seriously tested now, though, with comparable sales in the division that includes Marshalls and TJ Maxx falling 6% in the quarter from a
year earlier amid a decline in traffic to stores.
Job No. 1, then, is making those physical stores feel as welcoming and safe as possible. With that in mind, the company has installed protective shields at checkout and has removed some racks so visitors can move around more easily and maintain a social distance. Those are smart moves that should help encourage repeat buying from the shoppers who choose to walk through their doors. But I worry these steps, and a planned ramp-up in marketing spending, won’t be enough to override emerging preferences for avoiding unnecessary store trips.
Good thing the company can count on its HomeGoods chain, which saw booming comparable sales in the quarter amid a wave of DIY decorating and renovation that has been catalysed by stay-at-home lifestyles. And smart that it is loading up on pack-away inventory that it can probably get at a good price given the glut of clothing that has gone unsold in recent months.
Kohl’s , the ubiquitous department store: Kohl’s suffered a 23% sales drop in its latest quarter from a year earlier, and its shares have slumped more than 60% year to date. The chain is wisely trying to steer its merchandise assortment toward more casual attire, a pivot that should be reasonably successful given how strongly its workout wear category has grown in recent years. The department store is also trying to capitalise on the misfortunes of its peers, using geo-targeted marketing to lure customers in towns where competitors are closing stores.
Kohl’s has had success with this tactic in the past when Bon-Ton stores went out of business. But I’m not convinced it will be as effective amid the pandemic, when shoppers don’t have any pressing need to give an unfamiliar clothing store a chance. Kohl’s is expecting an earlier start to holiday shopping this year, too, and is planning its merchandising and discounting strategy accordingly. This might end up being a mistake: While people will undoubtedly be looking to avoid crowds, and starting early is a way to do that, there will also be tremendous uncertainty in October around the stability of their employment situations and what form their December celebrations can safely take.

—Bloomberg