It seems that a vaccine for the Covid-19 virus may be available soon. Well, it couldn't come too soon. A year's worth of devastation wrought by the virus on people worldwide, coupled with caustic politics on how to deal with the pandemic, has left scars on our body politic.
From our industry's perspective, what's left, and what have we learned? First, let's take a look a what's left: we’re a smaller industry struggling to figure out the best way forward. Next, what have we learned:
Big isn't always better.
Global supply chains are easily broken.
Ideals like "sustainability" are mere pipe dreams when the economic chips are down.
Sounds dreary. Yet, the industry will continue as it has before — only with different approaches to conducting itself. It's easy to imagine two segments coinciding simultaneously: one that resembles the old fast fashion model and another that embraces a more home-spun approach to making and selling clothes.
An altered future?
Global supply chains aren't going to dissipate once the pandemic has passed. The motives behind these massive supply chains will remain. But what has changed is that an opening has emerged for locally sourced production. Indeed, what was once a niche portion of the market — regional production— gained considerable momentum during the pandemic. And is poised to build on that momentum once the economy returns to post-pandemic normal.
People may argue about my perceptions of the market, but I think most people can agree that our industry will be different, altered from its original trajectory, and now aimed at some new. But in a sense, I'm discussing the short-term — the next year or so. But what about further into the future than that?
A fool's errand
Forecasting the future is a fool's errand. The farther out one looks out in time, the cloudier the world becomes. However, despite the mist, there are basics that we know with certainty. And if we begin with those basics, we can construct an outline of what future years hold in store.
Let's begin with the most obvious: first, people will wear clothes. Second, people will shop based on need. Third, people will shop based on perceived value, storytelling, and fashion.
Perhaps less obvious are the following: first, people's buying patterns change over time either due to external forces (like a pandemic) or other factors (such a demographics). Second, the volume of purchases changes over time (perhaps due to changing economic conditions). Third, the kind of clothes purchased will change over time (either due to fashion or necessity).
Which brings me to another long-term observation: much of the world is getting older. The populations of significant consumption centers such as Europe, China, and (to a lesser degree) the U.S., are getting older. While at the same time, countries throughout South Asia and Africa are getting younger than the countries and regions mentioned earlier.
So, the big question is: how does this affect consumer purchasing power? More pointedly: how does this affect consumer purchasing of clothing?
A demographic reversal?
In a new book by Charles Goodhart and Manoj Pradhan, entitled "The Great Demographic Reversal," the current view of the global economy by many economists is in for a rude awakening. Today, common wisdom suggests that inflation will remain low, as will interest rates for the foreseeable future. However, according to Goodhart, a respected academic, and Pradhan, a former managing director at Morgan Stanley, this will change over the next few years and accelerate into an extended period of rising inflation and higher interest rates.
Why? In a nutshell: people are getting older. They claim: "The old, at their late stage in the life cycle, don't save, but spend, so savings' gluts' of the kind thought to have paved the way for today's low interest rates will vanish as populations age."
In short, global society will be entering a period of demographic imbalance, according to Goodhart and Pradhan. It's a controversial analysis and flies in the face of conventional wisdom.
An effect of globalization has been to keep prices — hence, inflation — low. In fact, many central banks have had a difficult time keeping targeting interest rates constant; they kept falling along with inflation. This was due to increased global competition, the relocation of production to low-cost countries, and high savings rates worldwide, particularly in China.
And that was before the pandemic. During the pandemic, a time of economic emergency, interest rates have been slashed to virtually zero.
So, the printing presses have been kept busy during the pandemic crisis and will likely continue to pump out paper into next year to keep the economy propped up. But at some point, perhaps after a vaccine is administered around the globe, economics will slowly return to normal. And all that printed money? It’ll bring along higher inflation — and prices.
What’s more, people are living longer, particularly in the West. We can thank medical science for that. But as people live longer, who will care for those people? It is likely that retirement ages will be raised as people live longer, but doesn't that, in effect, take jobs from younger people?
On top of that is the reality that families rear far fewer children than in earlier generations. Whereas in the past, there could be multiple children to assist their parents as they grew older, today it's the opposite.
And then there's China: the former one-child rule haunts Chinese demographics. The country is aging quickly. Moreover, due to the nation's sheer size, it skews global demographics acting as a heavy counterweight to demographically younger countries like India.
So, using demographics as guideposts for guessing the future, what does this mean for our industry? From a consumer standpoint, the kinds of jobs open to young people may differ from those available to older generations when they were young. Healthcare jobs may be plentiful, whereas other occupations may not have as many openings, such as finance and technology.
As a consequence, what about consumer buying power? This is where Goodhart and Pradhan really stick their necks out. They believe that older people will actually spend more than their younger cohorts resulting in higher inflation, and greater costs for goods and services.
Common sense would think the opposite: with age comes economic consolidation, fixed incomes, and the like. But with people living longer, older workers will continue to generate earnings, and in turn, their spending will remain significant.
Boomers in denim
Will the generation of the '60s, the Baby Boomers, stick with their denim, or will they tumble into old age wearing more casual clothing? In turn, will fashion be neglected for simple comfort? But if they are working longer, will that translate into more demand for tailored clothing?
And what about younger consumers? Presumably, they will not have their parents' purchasing power and, consequently, favor cheap, disposable fast fashion? Even so, this is the generation of the environmentally conscious consumer. Will their buying patterns adjust to reflect that? Buy less, but buy quality? Pay more for clothing that lasts? Look for timeless fashion?
Guessing at answers
So many questions. Answers are just guesses. The only thing we can positively say is that, yes, the population of many major consuming countries around the world is aging, and this demographic is working longer than previous generations. In turn, this sets up a competition for jobs. It also means that fewer young people will be around to care for the elderly. Who will offer such care and pay for it? Governments? The retirees?
For apparel companies, such societal change will significantly alter the volume and quality of clothes made in the future. In turn, the origin of where the apparel is made could take on more significance for many consumers.
Baby Boomers changed the world with their love of denim in the tumultuous 1960s. What about tomorrow's Gray Boomers? Or today's Millennials? T-shirts and sweatpants, perhaps, or a return to tailored clothing? Only time and age will tell.
Note: This article was originally published on December 11, 2020 on just-style.com.