Energy price increases, budget cuts and a decrease in purchasing power, what does it mean for the fashion industry?

On Budget Day, the government announced that it would release 17 billion euros to boost purchasing power. The minimum wage rises by 10 percent and households get 3.9 percent more to spend. However, that is not enough to dampen inflation and is just a band-aid on the sore wound of the gas and electricity bills. 

It has not gone unnoticed; consumers are cutting back and preparing for a turbulent autumn. What does this mean for the fashion industry? More expenses, less income? The answer is more balanced. First of all, there are ways to reduce the impact of the crisis. For example, trade association EK-Retail (formerly Euretco and therefore referred to in this article as EK-retail / Euretco) says there are measures property owners can take (if you are not an owner, talk to your landlord to look for solutions). For example, have you ever looked at installing solar panels, are the walls insulated or can you switch to another heat source? Obvious but effective: can the store temperature be lowered by 1 or 2 degrees? And for the shops with multiple entrances and exits: can you close a few or is it possible to convert regular doors into automatic sliding doors? 

EK-Retail/ Euretco: ‘The mood in the mid- and high-segment stores is surprisingly good' 

The store's opening hours could also have an impact on energy costs and staff shortages. Is it an idea to cancel a silent shopping evening or to close the store on Monday? Of course, these drastic decisions are enormously dependent on the location and customer base. At a busy A1 location, you'll be less likely to make this decision than if your store is located in a small village. 

The big question; how does the fashion retailer feel? 'Good', is the surprising answer from EK-retail/ Euretco, 'it's still very busy. After a slow start because of the nice weather, the consumer is now really buying. That astounded us, because with all the negative news, we were also nervous about how the autumn would go.' The fact that the stores affiliated with EK-Retail/ Euretco are now increasing turnover, also has everything to do with the segment (middle and high) in which they operate. In addition to savings, this consumer still has plenty of money to spend. Of course, these stores are also tense about what is to come, but partly due to the announced price ceiling on energy, there seems to be no reason to panic for now. 'The sentiment in the stores is just good, more jackets are being sold than ever before.' 

And how about the fashion retailers for whom the short-term vision is less optimistic? For them, EK-retail/ Euretco has developed a tool that can help them gain more insight into their energy costs and how this affects the company's results. The tool shows where savings can be made to continue to achieve healthy financial results. 

Written by Marjolein Stormezand in collaboration with EK Retail