That Style, Again? How Shopping Got So Boring
Manufacturers and retailers leaned on popular goods in the pandemic and often hit pause on innovating
4 min
The maker of Tonka trucks and Lite-Brite normally introduces four new toys a year. Last year, Basic Fun Inc. introduced one.
Manufacturers and retailers of everything from computers to dresses hit pause in the past few years when it came to innovation, the result of pandemic-related upheavals in the design, manufacture and distribution of goods, industry executives said. Shifting consumer demand and the expectation of an economic slowdown also played a role, the executives said.
New merchandise gives shoppers a reason to buy. Without it, sales tend to suffer. Retailers including Best Buy Co. and Gap Inc. said a dearth of new products, styles and colours contributed to lacklustre sales during the recent holiday season.
Now, the race is on to ramp up newness, the executives said. But the work that goes into creating new products often takes months, if not years. And some companies are reluctant to invest in the necessary research and development while economic uncertainty looms.
“The last thing you want to do is spend the money to create and market a new product and have it get stuck in the socio-economic crossfire of Covid, supply-chain disruptions and inflation,” said Basic Fun Chief Executive Jay Foreman. “All these things coming together at the same time means that you have to play it safe.”
Mr. Foreman said Basic Fun is delaying plans to relaunch its Littlest Pet Shop collectible figures until spring 2024 from fall of this year. “We anticipate the supply chain getting back to normal by the middle of this year,” he said. “But we’re still concerned about inflation and a slowdown in consumer spending.”
Gap Chairman and interim CEO Bob Martin said in an interview that a pile-up of excess inventory hindered the company’s ability to innovate.
“You stop leveraging creative strengths, you play it safe, and miss the bigger bets to get back on trend,” he said. Now that the company has worked through its excess inventory, he added, it has more room to devote to spring trends like eyelet and crochet tops at Gap, new suiting styles at Banana Republic, and Old Navy dresses with pockets.
There were 13% fewer new general merchandise items in 2022 compared with 2020, according to market-research firm Circana. The biggest declines were in beauty, footwear, technology, small appliances and toy categories.
Marshal Cohen, Circana’s chief industry adviser, said the decline is unprecedented and the result of several converging factors.
The Covid-19 pandemic radically altered consumption patterns, which forced manufacturers and retailers to pivot quickly to keep up with shifting demand. Supply-chain disruptions created first a scarcity of goods, and then a glut. With excess merchandise clogging shelves, retailers were unable to bring in fresh goods. Remote work made collaboration to dream up new ideas more difficult.
“Something as simple as a new flavour, colour or style can create demand,” Mr. Cohen said. “With a decline in newness, we are boring consumers to death.”
When demand for computers, TVs and other electronic gadgets surged, manufacturers focused on producing as much as they could of existing products to address shortages, Jason Bonfig, Best Buy’s chief merchandising officer, said in an interview.
Mr. Bonfig said he is starting to see an improvement in the flow of new products hitting stores, including TVs with larger screens and computers with longer battery life. “Vendors want to get back to growth,” he said. “They know new models are what brings people to our stores.”
Some retailers have acknowledged that the problem rests as much with them as with their suppliers.
“We didn’t have as many choices in women’s tops as we did in the past,” Ed Thomas, CEO of teen-clothing retailer Tilly’s Inc., said in an interview. “Part of that was our problem. We may have been offered styles that we said no to, because we were too gun-shy to take a chance. We had no idea where the economy was going, so we were more conservative in our buying.”
Nordstrom Inc. has set a goal this year of selling through its inventory at a rate 10% faster than last year, to allow it to bring in fresh merchandise more frequently, according to Pete Nordstrom, the department-store chain’s president. “We want our customers to say, ‘Every time I come to Nordstrom there is something new,’” he said.
Retailers said there are more new products hitting stores now that the supply chain is normalising and the excess inventory of past seasons has been cleared out.
But shoppers might not see a big change just yet.
“There is a disconnect between what’s in stores and what’s being shown on the runways and in fashion magazines,” said Lucia Gulbransen, a personal stylist. “You just can’t find the newness and the fashion-forward looks you see on Instagram.”
Some manufacturers said retailers are still too hesitant to pull the trigger on big, unproven bets.
“It’s an all-around risk-averse season,” said David Katz, chief marketing officer of Randa Apparel & Accessories, which makes clothing and accessories for brands ranging from Calvin Klein to Levi Strauss & Co. “There is more pushback than usual on new styles.”
Jackie Ferrari, CEO of clothing manufacturer American Fashion Network LLC, said basics such as T-shirts, tank tops and hoodies now account for about 60% of the assortment at large, mid tier chains, up from the low-50% range in 2019. Rather than adding new silhouettes, retailers are reordering best sellers with new colours and fabrics, she said.
The issue isn’t limited to companies selling consumer goods. Walt Disney Co. CEO Robert Iger recently told investors that the company needed to be careful about which comic-book characters and stories it develops into TV shows and movies from its Marvel Entertainment franchise to ensure “newness.” “Sequels typically work well for us,” Mr. Iger said. “Do you need a third or a fourth, for instance, or is it time to turn to other characters?”
Of course, there are always exceptions. Wide-leg jeans ushered in new clothing styles, including shorter tops and chunkier shoes, and luggage with built-in phone chargers spurred demand for new travel bags. But overall, retailers are still grappling with how to get more newness in front of shoppers, some of the executives said.
Customers are impatient. Robert Smith, a 49-year-old investment manager, said he started searching out smaller, more-unusual clothing brands online after showing up at a networking event wearing the same outfit as another attendee—a black linen shirt and matching shorts that he bought at a big-box chain.
“There isn’t much variety,” said Mr. Smith, who lives in Loves Park, Ill. “If you go to one store, you see the same thing at another store.”
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From making unpopular decisions to learning when to listen, leaders from five businesses reveal what nobody prepared them for — and how running a company has challenged their expectations.
Technology and semiconductor shares fell sharply as investors questioned the debt financing the AI infrastructure boom and confronted higher rates and Chinese competition.
Technology and semiconductor shares fell sharply as investors questioned the debt financing the AI infrastructure boom and confronted higher rates and Chinese competition.
4 minA sharp technology sell-off has exposed a new anxiety on global markets: whether the enormous borrowing behind the artificial-intelligence infrastructure boom can generate sufficient returns as interest rates rise and Chinese competition intensifies.
The artificial-intelligence investment boom has powered technology shares, semiconductor manufacturers and data-centre operators to extraordinary heights. Last week, investors were given a reminder that much of this expansion is being built with borrowed money.
The technology-heavy Nasdaq Composite fell 4.5 per cent over the week ended October 16, its weakest performance since late June. Semiconductor shares suffered an even deeper correction, with the Philadelphia Semiconductor Index losing about 11.4 per cent.
The selling spread quickly through global markets. Micron Technology fell 14.6 per cent over the week, while South Korea’s Samsung Electronics and SK Hynix dropped approximately 18 per cent and 24 per cent respectively.
This was more than a routine bout of profit-taking. Investors were reassessing three interconnected risks: higher interest rates, the rapidly expanding debt burden attached to AI infrastructure and the prospect of stronger competition from Chinese memory-chip manufacturers.
The debt behind the AI build-out
Artificial intelligence requires a physical infrastructure network of enormous scale. Data centres must be built, advanced processors purchased, power supplies secured and cooling systems installed before customers begin generating meaningful revenue from them.
Technology companies are increasingly supplementing their own cash with corporate bonds, syndicated loans, equipment leases, private credit and project-level financing.
JPMorgan describes the emerging funding model as a combination of conventional corporate borrowing and project finance tied to individual data-centre assets. In Australia, the Reserve Bank estimates that syndicated loans accounted for approximately three-quarters of data-centre financing during 2025 and 2026 to date.
The numbers are becoming large enough to affect broader credit markets. The Federal Reserve Bank of Dallas has cited Wall Street estimates suggesting AI-related investment-grade bond issuance could approach US$300 billion in 2026 alone.
That borrowing is not automatically problematic. Debt can be an efficient way to finance long-lived infrastructure when future revenue is sufficiently predictable. The concern is that AI technology, customer demand and computing economics are changing much faster than the repayment schedules attached to the assets.
A data centre financed today may carry debt for years. Investors must therefore make assumptions about future utilisation rates, electricity prices, chip performance, customer concentration and the amount businesses will ultimately pay for AI computing.
When interest rates rise, those assumptions become less forgiving.
Inflation changes the calculation
September’s US inflation data intensified the pressure. Consumer prices increased 3.7 per cent over the year, ahead of market expectations and up from 3.4 per cent in August.
The hotter reading reduced confidence that interest rates would fall quickly and pushed bond yields higher. That matters particularly for companies whose valuations depend on profits expected well into the future, as well as highly leveraged infrastructure operators that may need to refinance.
CoreWeave has emerged as a closely watched test case. The specialist cloud-computing company has accumulated substantial debt and lease obligations to build AI capacity, while relying on a concentrated group of large technology customers.
Its shares fell sharply during the sell-off, while the cost of insuring its debt against default climbed. CoreWeave has argued that its contracted backlog more than covers its obligations and that financial markets do not always understand its business model. Nevertheless, its securities have become a proxy for investor confidence in debt-funded AI infrastructure.
Oracle, another major investor in AI computing capacity, fell 8.8 per cent in Friday trading, while CoreWeave dropped 15.5 per cent.
The question is shifting from how much AI infrastructure can be built to how profitably it can be operated.
China adds another source of pressure
Interest rates were not the only catalyst. Reports of advances by Chinese memory-chip producer ChangXin Memory Technologies raised concerns that lower-cost Chinese products could increase competition across the global semiconductor industry.
Memory chips are essential to AI systems, but the industry is historically cyclical. Periods of tight supply and high pricing can encourage rapid investment, eventually producing oversupply and falling margins.
The prospect of a well-funded Chinese competitor expanding its technological capabilities unsettled investors in Samsung, SK Hynix and Micron. It also demonstrated that AI-related demand does not insulate chipmakers from conventional competitive pressures.
That combination—slower rate cuts, more expensive financing and potentially cheaper supply—challenged the assumption that every company exposed to AI would enjoy continually expanding margins.
A reset rather than the end of the boom
The sell-off does not establish that the AI boom is ending. Demand for computing power remains strong, the largest technology companies continue to generate formidable cash flows and many infrastructure projects are backed by long-term customer contracts.
What has changed is the market’s willingness to overlook the price and financing structure of that growth.
The most resilient companies are likely to be those able to fund investment from operating cash flow, secure long-duration customers and demonstrate that new capacity will earn returns comfortably above its financing costs.
More speculative operators may face greater scrutiny, particularly where debt is expensive, customers are concentrated or expected revenue depends on demand that has not yet materialised.
For Australian investors, the lesson extends beyond US technology shares. Local data-centre operators, infrastructure funds, electricity suppliers and property groups are increasingly exposed to the same investment cycle.
Artificial intelligence may remain one of the defining growth themes of the decade. But last week’s correction showed that enthusiasm for the technology does not eliminate financial discipline.
The next stage of the AI boom will be judged not only by computing power, model performance or demand for chips, but by something more traditional: whether the assets being financed can generate enough cash to repay the money borrowed to build them.
Fact box
Nasdaq Composite: Down 4.5 per cent for the week ended October 16, 2026
Philadelphia Semiconductor Index: Down approximately 11.4 per cent
Micron Technology: Down approximately 14.6 per cent
Samsung Electronics: Down approximately 18 per cent
SK Hynix: Down approximately 24 per cent
US September inflation: 3.7 per cent annually
Estimated 2026 AI-related investment-grade issuance: Approximately US$300 billion
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Technology and semiconductor shares fell sharply as investors questioned the debt financing the AI infrastructure boom and confronted higher rates and Chinese competition.
