The pre-COVID "retail apocalypse" was already, arguably, an apparel apocalypse.

Well before the disease outbreak, apparel sales growth was ebbing, workplace and special occasion dress was more casual, and the embattled middle class had to be picky about what they spent their money on. All that, plus other political and economic forces led McKinsey, in a report released with Business of Fashion last year, to warn apparel retailers that their 2020 sales would "slow further," due to "consumers being increasingly cautious amid broader macroeconomic uncertainty, political upheaval across the globe and the continued threat of trade wars."

It was a dire warning that nevertheless contained no inkling of the serious contagion to come, nor its attendant store closures, knee-capped supply chain and recession. The pandemic also exacerbated some of those underlying trends already sapping apparel retail. Dressing down at the office? If only. Not only are most people still working from home, but, according to the Kung Group, many will continue indefinitely, with 70% of company founders open to letting some or all workers remain remote, 66% reconsidering their office investment and 76% finding that productivity has been level or improved.

That has major implications for retail, and especially apparel, according to Lee Peterson, executive vice president of thought leadership and marketing at WD Partners.

"I only need a sweatshirt and a pair of jeans to do anything in these days," he said by phone. "I’m looking at all the clothes in my closet — I could cut that in half and still go into the office a few times a week if it comes to that."

The situation led eMarketer earlier this year to forecast a nearly 22% decline in sales of apparel and accessories this year, a year-over-year loss of over $100 billion. Even online sales in the category "will rise just 8.6% in 2020, a significant deceleration from last year’s growth of 15.9%."

But, while the pandemic may have accelerated some existing trends and is certainly roiling the industry, it won't actually stop fashion.

"I don’t think retailers thought they’d be selling all these masks, but look what the customers decided — masks are fashionable," Shawn Grain Carter, professor of fashion business management at the Fashion Institute of Technology, said by phone. "Yes, people are going to buy fashion because you can’t do anything in the nude."

The COVID cover

The pandemic has been devastating for apparel retailers. This year's long list of bankruptcies, which could get longer before the year is up, is dominated by specialty and department stores dependent on sales of clothes. But some analysts believe that the COVID-19 pandemic has provided a unique opportunity to make crucial adjustments to operations that would be a hard sell in a normal year.

That includes shrinking footprints that had become unwieldy and unprofitable. Several retailers, even those not in bankruptcy court — from Gap (which went so far as to close its San Francisco flagship) to Nordstrom (which will close 16 full-line stores and all three of its Jeffrey specialty stores) — have opted not to reopen portions of their fleets after temporary closures were forced on them due to the pandemic. Moody's analysts recently flagged store closures as a reason to upgrade retail's outlook from negative to stable despite the disease outbreak's ongoing challenges.

"US retail has long had too many stores and still has more mall space per capita than any other country in the world," they wrote in an emailed report. "Where previously these retailers could live with marginally profitable stores, the abrupt mass shift in US shopping habits will cause many more stores with limited economic value to close."

BMO Capital Markets analysts, led by Managing Director Simeon Siegel, believe the pandemic provides cover for retailers to take action normally seen as drastic, but that would leave them with profitable fleets and customers willing to pay full price — a process they call "shrink to grow." They note that Coach took such unusual steps pre-COVID, forgoing revenue by pulling away from department stores, off-pricers and its own outlets in order to elevate its brand and charge more. It takes an about-face, toward mulling which channels are good enough to remain.

"As retailers question which stores to open, rather than close, the pandemic offers a (hopefully) once in a lifetime 'opportunity' for companies to focus on health, rather than growth... re-fashioning businesses as if starting anew and allowing well-capitalized companies to use a 'COVID-19 Cover' to ponder whether Stronger is better achieved via Smaller," according to a Sept. 11 BMO report titled "Did COVID Actually Save Retail?"

For brands, that will take a willingness to turn away customers who only buy when prices are slashed, Siegel said in a phone interview. This is more difficult for department stores, he noted. Like malls, they depend on traffic to move a lot of merchandise, and promise in-store experiences — something people don't want right now — to get customers through the door.

"By giving up certain sales you can actually improve the remaining sales," he said. "By selling less we can charge more. It's not looking for the transactional nature of retail, but looking to sell an experience and memory and brand association. That’s the difference. What COVID may allow the retailer to realize, or allow the brand to realize, is they can be more discerning."

The pandemic's contribution to fashion

As people continue to work from home, sales of athleisure and loungewear have skyrocketed. At the holidays, the NPD Group expects sweatshirts, sweatpants, active bottoms, sleepwear and socks to jump to 31% of U.S. apparel spending, from 26% last year.

But that's this year. While the desire for comfort will likely endure even after gathering together is allowed again, consumers will probably be ready to change their clothes, fashion experts say.

"I think we’re going to get a big return to dressing, what I would call casual elegant looks, taking some of the habits born in COVID when clearly comfort is number one," said Tom Ott, founder of retail consultancy Retail and Fashion Solutions, who once served as general merchandise manager for men's at Saks Fifth Avenue. "My sense is the customer is going to want to celebrate."

Even those like WD Partners' Peterson who are cleaning out their closets and sticking to sweatshirts may decide it's worth it to pay more for a high quality, sustainably made item, Peterson said. It's an opportunity for what some call "slow fashion," building a wardrobe with better garments, according to Ott.

"It’s the responsibility of the retailers and the brands to talk about dressing," Ott said. "Nobody’s telling people, 'hey it matters what you’re wearing.'"

In fact, FIT's Carter said that during a recent virtual conference with the National Retail Federation, Macy's CEO Jeff Gennette did himself no favors by dressing as casually as he did. In reality, dressing well could help someone land a job, and matters when interacting with people outside of the U.S. who still dress up for work, say both Ott and Carter. 

"There has been a bit of a death knell for menswear — women have more variety," Carter said. "Jeff Gennette, when I saw him in that video not wearing a tie, I thought, 'oh, he’s killing his own business.'"

Carter and Ott both believe that pent-up demand could spark apparel sales, even in the short term as the holidays approach. Longer term, well after 2020 is over, retailers and brands would be wise to cater to the increasing number of customers interested in sustainability, including getting their clothes second-hand, or renting them, they said.

But above all, because people must get dressed, even for a video call or a walk in their own neighborhood, they still face the question of what to wear, and always will. That's where fashion comes in, they said.

"The business is going to come around," Ott said. "This is arguably the worst business climate that I’ve seen in my career. What I will tell you, though, is that retail and fashion are resilient. People aren’t going to walk around naked, and there’s going to be something that is exciting that they’re going to want to wear."