Consumers who make early purchases of fashion apparel often pay a premium for being the first to wear the new styles. These consumers are often characterized as being relatively less price sensitive and more affluent than those who make their purchases later in the selling season. In this study we show that the sales of fashion apparel early in the season are substantially influenced by the confidence consumers have about the future state of the economy. Monthly sales data from five divisions of a Fortune 500 retailer are pooled together in a hierarchical Bayes model to produce estimates of the influence of consumer confidence and purchasing ability. These variables are shown to have a differential pre-season and in-season effect on sales, with confidence being a stronger predictor of pre-season sales and ability a stronger predictor of in-season sales. This result indicates that, when developing marketing plans, retailers need to be aware of the fact that fashion-forward consumers who purchase apparel early in the season are more sensitive to economic conditions and expectations than previously believed.
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Allenby et al. (1996) studied this question.
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