A decisive U.S. election outcome gave investors firmer ground and improved the outlook for holiday retail, with fashion and retail stocks rising. The Dow Jones Industrial Average gained 3 percent to 53,356.12. Reformation, American Eagle Outfitters, Abercrombie & Fitch, Under Armour, Victoria’s Secret and Gap also recorded gains ranging from 8 to 9.4 percent.

The more positive outlook comes after a year in which inflation and higher fuel costs have put pressure on consumers. Shoppers have proved more resilient than some expected, but they remain wary about spending. Martin Lindstrom, founder and chairman of brand and culture group Lindstrom Co., said consumers are hurting and hesitant to trust what they hear. He suggested that a fall in oil prices could quickly help restore confidence.

Lindstrom described the holiday season as likely to be sluggish rather than a boom or a disaster. He said the political shift had helped avert what he believed could otherwise have been a disastrous season. The outlook is less favorable in Europe, where he expects a prolonged recession risk and said households face particular pressure as winter approaches.

In the U.S., AlixPartners fashion retail leader Sonia Lapinsky said the firm had forecast holiday growth of 4 to 7 percent. With inflation at about 3.7 percent, sales could be close to stagnant at the lower end of that range. However, she said consumers’ optimism after the election could encourage more spending and potentially move results toward the upper end.

Any extra willingness to spend does not mean shoppers will be less selective. Lapinsky said consumers are frustrated when higher prices are not matched by better quality, and are increasingly researching products themselves. For retailers, the challenge is to show that the price reflects what customers are actually getting.

The election also offers brands a lesson in how to reach consumers. Marcie Merriman, a cultural anthropologist and founder of Ethos Innovation, said companies can no longer rely on broad demographic categories or assume they have lasting loyalty. Brands need to understand what matters to customers and respond when those priorities change.

Greg Portell, a lead partner in global markets at Kearney, said retailers should communicate in language consumers understand, set prices thoughtfully and position their brands in line with household realities. He said trust depends on being direct and avoiding messages about issues shoppers do not care about.

Affordability is also drawing attention in Washington. Matt Priest, head of the Footwear Distributors and Retailers of America, said families expect elected officials to address the cost of necessities and argued that footwear taxes are a place to start. He cited combined tariffs on some children’s shoes of up to 87.5 percent. Steve Lamar, chief executive of the American Apparel and Footwear Association, also identified affordability as a central voter concern, while saying it remains unclear whether trade policy will change. Both groups called for lower tariffs on everyday products.

Sources: WWD.