Footwear Insight - Business Report Quarterly

impacts and some measures for alleviating its impact. Here's what the team at NuORDER by Lightspeed had to say. FI-BRQ: What brands and industry segments are collapsing under the stress of inflation? NuORDER by Lightspeed: Inflation is impacting many industry segments. If we look at the calendar Q4 earnings results across various retail categories, there appears to be a resounding sentiment that inflation is impacting where and how consumers are spending. As the costs for raw materials rise those costs are oen being reflected in brands' wholesale prices, and ultimately the final consumer price. Rising employment and shipping costs have also been cited by retailers as having an impact. At the same time, retailers are under stress to control costs because many consumers have already pulled back on discretionary spending. What can these brands/companies do to avoid this scenario or get out of it? Overall, brands and retailers are being driven to find ways to become more efficient. Many of the brands and retailers we work with are focusing on optimizing the wholesale buying and selling process to avoid redundancy, over-buying, under-buying, and time and money wasted on travel for in-person market meetings. Technology is critical to eliminate outdated processes like filling out spreadsheets to place orders. NuORDER by Lightspeed enables brands and retailers to act as close partners by collaborating around purchasing data, so they can capitalize on demand for high-performing SKUs and reduce inventory risk for underperforming styles. By working more efficiently together, brands and retailers can endure inflation, react faster to changing consumer demand and improve business processes for the future. How are other brands/industries avoiding inflation's impact on consumer spending? While we believe there is not a single brand or industry that is completely avoiding the impact of inflation or changes in consumer spending, there are examples of brands and retailers that have pivoted more effectively to align with current trends. To help protect profits, retailers can use strategies such as reducing receivables and delaying when they receive orders so they aren't arriving until closer to the season of use, which can help them avoid end-of-season markdowns. Retailers can also delay when they are purchasing seasonal goods so they can react to real market data and demand versus trying to predict trends. Additionally, retailers can double down on brands they know perform well versus taking risks on unknown brands. Drop shipping directly from the brand to the end consumer is another tool that can be beneficial to retailers. Is there any timeline for when inflation/ higher prices will ease to an acceptable, non- impactful, level, or is this situation likely to persist for the foreseeable future? We believe inflation will likely continue to have an impact on consumer spending this year. n Editor's Note: Inflation is also impacting charitable giving. e Giving USA Foundation reports that charitable giving declined sharply in 2022 when inflation hit a 40-year high. It bounced back slightly last year but remains below its record year in 2021. Founded in Montréal, Canada in 2005, Lightspeed is dual listed on the New York Stock Exchange (NYSE: LSPD) and Toronto Stock Exchange (TSX: LSPD). With teams across North America, Europe and Asia Pacific, the company serves retail, hospitality and golf businesses in over 100 countries. footwearinsight.com Q2 July 8 2024 ~ Footwear Insight Business Report Quarterly 27

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