Will the Election of Joe Biden Have a Positive Effect on Fashion and Retail Industries?

Images courtesy of  OLIVIER DOULIERY/AFP via Getty Images

The 2020 presidential election is finally over. And though many US and global citizens are celebrating the results, there is still much uncertainty about the future. US consumers have a lot to be concerned about.  

The US economy is still in a deep recession. COVID-19 infections are on the rise, in fact, many US states are in a second wave of COVID-19 infections. And of course, climate disaster is ever present with small woodland fire outbreaks still occurring in California and flooding in some US states.

Still, with the Biden/Harris win many folks are hopeful that the president and vice-president elect will over time turn things around. That said; this new normal is causing some dramatic changes in life and culture in the US. And perhaps, that most dramatic adjustments are happening in the fashion and retail industries.

Fashion is a part of our daily existence, whether it is acknowledged or not. Unlike art that might hang in museums, live stage performances or cinema, we live our lives in clothes, or as some might call it, wearable art. (A nod to Stanley Tucci’s line in “The Devil Wears Prada.)

The COVID-19 pandemic is changing all of that. With many people working from home and cultural events and entertainment venues shut down due to the COVID-19 pandemic, there is little need to purchase new garments. This set of events has been catastrophic for retail and fashion industries. However, there could be a turnaround with the new administration.

Image courtesy of politico.com

With Donald Trump’s election in 2016, there was a dramatic surge in market trading on Wall Street. And luxury brands, particularly those owned by multinational holding companies LVMH and Kering Group saw their profits increase during the beginning of the Trump administration. Even the COVID-19 pandemic has not had a deleterious effect of many global luxury fashion brands. According to the crfashionbook.com, “despite the coronavirus pandemic raging on in the United States, it looks like luxury brands aren’t going anywhere with both fashion conglomerates LVMH and Kering Group reporting strong third-quarter earnings this year.”

And according to many financial pundits, Trump’s massive tax cuts to corporations and wealthy Americans will re-invigorate the US economy if he had been re-elected. However, there are others that have a different perspective of the newly elected Biden/Harris ticket.

According to a survey conducted by Glossy/Modern Retail, as reported in jingdaily.com, “46.8 percent of those polled agreed that the US economy would improve with a Biden win. Only 12.9 percent expressed the same confidence for Trump.” The survey also found that a Biden presidency would also improve China/US trade relations.

Jing Daily also revealed that 20 top American fashion designers—Jason Wu, Donna Karan, Vera Wang, and Michael Kors—supported the Biden campaign. Even Supermodel Karlie Kloss, who is married to Jared Kushner’s brother, put her support behind Joe Biden.

Consider that Biden has promised a tax rate increase on the wealthy and corporations from the current 21% to 28%, which the corporate elite will not be happy about. If you are diehard trickle-down economics advocate, you might believe this Biden tax increase would be bad for business, and ultimately slow the trickle down to consumers.

Image courtesy of newsfeed.com

Trickle-down economics based their economic theories on the writings of Nobel Prize winner in Economics Milton Friedmann. Friedmann was a distinguished University of Chicago economist for many years. He believed that less government, less regulations and tax cuts would stimulate economic growth. These theorems were the basics of Reaganomics which led the US into an era of deregulation, unparalleled economic growth, particularly for corporate elites, and the defunding of many government programs. The “Greed is Good” moniker came out the Reagan administration.

This era of deregulation, tax cuts, and government program defunding slanted economic growth toward the wealthy. Reagan’s economic projection was supposed to be good for all US citizens because eventually wealth would trickle down to everyone. That did not happen. While there was substantial economic growth during the Reagan era, the average US consumers began to see their wages stagnating. In fact, when adjusted for the cost of living, the average American consumer has not seen their wages increase in over 30 years.

With less disposable income, US consumers relied on credit cards and lots of department store sales to purchase desired garments. And while that worked for over 25 years, we are now in a different era.

Image courtesy of forbes.com

The fashion and retail markets were on a downward spiral before the COVID-19 pandemic. Many major department stores—Barney’s, Lord & Taylor, Sears, Fred Segal, JCPenny, Neiman Marcus, and others—had declared bankruptcy or restructured their debt before the current health pandemic, COVID-19 has only made it worse.

So, what concerns the fashion and retail markets is if the Biden presidency will have a positive, negative, or stagnating effect? Luxury analyst Erwan Rambourg believes that luxury markets will not decrease if there is a Biden win. “Given the amount of wealth in the US, the underdeveloped nature of the luxury market relative to that wealth and the recent shift towards a mentality that says it’s appropriate to reward oneself,” argues luxury anylist Erwan Rambourg. “It’s clear to me that, taking a long view, America’s luxury market has good days ahead.”

Stephen Lamar, CEO of American Apparel & Footwear Association detailed on a Twitter video that, “holiday is the most important shopping day of the year, we put a lot of effort behind it. Its longer, its more omnichannel, where there is a better integration between brick and mortar and online activities and we are really hoping it will be a good year, though its been a really challenging year all along.” And when it comes to the Biden presidency, Lamar contends, “We think a Biden administration will probably be more process-based, more predictable … We’re hoping that they’ll be able to recognize that these global supply chains create a lot of jobs in the United States.”

What will mark a turnaround for US consumer when it comes to purchasing garments is how Biden will handle the COVID-19 pandemic. Studies show that when consumers visit brick and mortar stores, they tend to purchase more product. In 2019, First Insight Report found that “71 percent of all shoppers surveyed spent $50 or more when shopping in-store. This compares to only 54 percent of respondents spending more than $50 when shopping online,” as reported in Forbes. And in-store shoppers are more influenced by impulse buying, 89% of women and 78% of men, compared to online shoppers, 77% of women and 67% of men, also found in the 2019 First Insight Report.

Image courtesy of wwd.com

Due to the COVID-19 pandemic, online shopping has increased. Online shopping still does not outpace brick and mortar shopping. Remember, online spending is deftly influenced by algorithms imbedded in your computer’s cookies and retail stores algorithms; only regurgitating searches you’ve already used before. When you go to a brick-and-mortar store you are not influenced by online sites’ algorithms. You are free to look at everything in the store.

Depending on how President-elect Joe Biden handles the second wave of COVID-19 infections, departments and stores and consumer will open their doors to more consumers and consumers will feel safe among larger crowds, and will not have to wait on long lines to enter stores. And with the Biden/Harris election, most US citizens are celebrating their win. Studies prove that happy people tend to spend more money and spend their money more wisely than people are sad or depressed. A 2016 article on psychsocialonline.com states that happy people often spend more money, but what makes them happiest is spending money on others. And with this Biden/Harris win the retail industry is hoping that consumer spending will increase during the holiday season, the season of giving. 

Only time will tell if the Biden presidency will be good for fashion and the retail industry. However, studies show that when folks are happy, one of the ways joy is expressed is by shopping. If the partying in the streets, celebrating the Biden/Harris win are any indication of the mood of the country, department stores better increase their inventory!!

—William S. Gooch

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