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Sept. 3, 2022, 1:05 p.m. EDT

It’s not just inflation. People aren’t visiting clothing stores like they used to because they’re sick of loungewear.

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By Emily Bary

As many segments of the economy roar back from pandemic-driven slumps, consumers still aren’t returning to stores like they used to.

Sluggish traffic continues to dog apparel retailers, which are now sitting on large piles of inventory that they have to discount in order to sell. Walmart Inc. /zigman2/quotes/207374728/composite WMT -0.40% and Nordstrom Inc. /zigman2/quotes/203902116/composite JWN +0.73% are among major companies that have announced plans to mark down items in order to clear the shelves.

Don’t miss: Here’s what the big inventory problem for retailers looks like

Despite talk of inflationary pressures on consumers, one key issue for apparel retailers at the moment is simply that shoppers don’t want to buy the sorts of things they have in stock, according to R.J. Hottovy, the head of analytical research at Placer.ai, which uses location data to generate traffic insights.

The inventory that came in was more geared to last year’s trends, and by the time it arrived, “consumer mindset had shifted to more occasion wear,” he told MarketWatch.

There’s been a “definite shift from goods to services,” and when people do buy clothes, they want to dress up for occasions out of town, he said. In contrast, the inventory coming in “was pandemic wear,” or lounge clothes.

See more: We’re done with pajamas. What we need is luggage. Macy’s sales show how consumer behavior is changing.

The disconnect between shopper needs and available inventory is weighing on traffic trends, Hottovy continued. Retailers plan inventory “usually a year out, if not more,” he said.

Of course, trends change quickly. Morgan Stanley analyst Kimberly Greenberger highlighted earlier this week that Nordstrom “merchandise skews heavily to wear-to-work and special occasion.” The company has benefited as shoppers load up on new office wear after having “over-spent” on more casual areas of clothing last year, but she worries that Nordstrom’s offerings could fall out of favor next year if consumer priorities shift again.

Some categories—and retailers—are performing better than others in the current environment. The beauty business is holding up well, according to Hottovy. And Dick’s Sporting Goods Inc. /zigman2/quotes/200566298/composite DKS -0.97% , which has changed up the look of its stores in recent years, posted better-than-expected numbers .

“Store traffic trends were strong again this quarter as guests return to in-store shopping and services,” Ulta Beauty Inc. /zigman2/quotes/210513442/composite ULTA -1.66% Chief Executive David Kimbell said on the company’s earnings call Thursday. “While store traffic remained slightly below pre-pandemic levels, the trend continues to improve.”

The management team at Dick’s didn’t spend much time discussing traffic on the company’s latest earnings call, though Chief Financial Officer Navdeep Gupta said that he was “pleased with the overall trajectory of the traffic.”

Some retailers, including department stores, made moves during the pandemic to “rightsize” their store footprints, with the expectation that by closing locations they could get better visitation within those that remained, Placer.ai’s Hottovy said.

Read: Gap stock rallies after retailer swings to surprise adjusted profit

Baird analyst David Tarantino, a restaurant analyst who recently looked at how soft retail traffic trends could impact fast-casual food chains, took a more macroeconomic view in discussing foot traffic more broadly across the retail sector.

“Weakness in retail traffic (still meaningfully below pre-pandemic levels) likely reflects increased pressures on discretionary spending as well as structural changes in buying patterns,” Tarantino said in a recent note to clients.

He recently analyzed data from Prodco, a shopper-analytics company, which showed that retail traffic was down 8% in the second quarter relative to three years back, with the comparable-period declines worsening as the quarter went on, and into July and August.

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