Once considered to be defining the statement of individualism, apparel no longer holds this status. An individual’s statement is now being defined by dining, gymming and travel. This article analyses the report by Bloomberg and the reasons US consumers’ have been putting their dollars in other promising experiences.
We all have been noticing the blame game happening in the retail industry in recent years. While some ‘old school’ still prefer the brick and mortar stores or prefer going to malls for shopping, for some the comfort lies within a tap of their mobile phones. Amazon, the online mammoth, is majorly held responsible for the ‘demise’ of departmental stores and their falling revenues.
But is this the complete truth? It is time we stop blaming Amazon or other emerging e-commerce companies like Alibaba, if statistics are to be believed. Bloomberg report reveals that an average annual spending of a US consumer on apparel was just US $ 1,803 in fiscal 2016 which is only 3.1% of its spending. The above statistics underlines that the spending dollars are making shift from apparel to ‘other’ things. What do these ‘other things’ denote?
It is a well-known fact that the millennials as a generation have taken over the social media by storm, whether it’s clubbing, shopping, travel, gym, or personal care, all of them are up on Instagram or Snapchat. The US dollar accordingly has been drifting towards experiences which include travelling, eating out and activities, and account for 18 per cent of the purchases done by the US consumer in a year. Even spending on technology, including data charges and media content, have surpassed the spending on apparel comprising 3.4 per cent of spending (Figure 1).
The situation does not seem to improve in future as it has been brewing for decades. “In 1977, clothing accounted for 6.2 per cent of U S household spending, according to Government statistics. Four decades later, it has plummeted to half of that,” reads Bloomberg report.
However, if Amazon hasn’t been the reason behind it… what is it then that has led apparel to become unappealing for US consumers? Bloomberg report has revealed several reasons for this sudden reduction in interest, out of which few are beyond the control of companies such as change in shopping behaviour, while others are missteps being taken by the retail companies.
Line of separation between workwear and casualwear dissipates
Back in the decades of ‘80s and ‘90s, officewear reflected the dedicated and career-oriented vibes of the employees in the organization. Masculine suit with broad shoulder pads, neck ties, pleated pants, long skirts, pointed toes and spiked heels defined office fashion in previous decades.
With time passing by, casual Fridays took over the whole week and business-casual look grabbed thumbs up from both the genders at the workplace. This indicates no more buying of a separate wardrobe look for office. Over the past five years, there has been a 10 percentage point spike in employers who permit casual dress any day of the week (Figure 2).
This new trend turned bad for the apparel companies. Although the sales of sneakers and jeans increased, the entire elimination of office wardrobe led to less buying of new clothes. About half of Americans say they can wear jeans to their professional offices, according to a survey by NPD Group.
Low pricing strategy falls back on retailers
The pressure on prices started right from the point where more and more retailers shifted to production hubs with cheap labour availability. This pressure gave way to low-cost, off-price and retailers that were able to offer fashion at a much less price. Target, Walmart, are among the low priced fashion retailers, even fast-fashion retailers like Zara, H&M, Forever 21 have jumped into the bandwagon marketing trendy designs and runway styles at less price.
But the strategy of low pricing and off pricing did more harm than being a profit to the retailers. “While the H&M locations are still growing, the pace of new store openings is at a two-decade low. The retailer has struggled to clear out products that shoppers didn’t want, in part because customers are skipping messy stores in favour of a streamlined online experience,” explains Bloomberg in its report (Figure 3).
Bloggers and Instagrammers become the new trendsetters
Clocks are turned, taking the power from retailers, fashion magazines and couturiers who used to dictate the fashion trends for the masses and consumers abided by. Now is the time of spontaneous social media influencers who experiment with the fashion trends, styles, brands to create their own unique style. A selfie look might combine a number of brands or accessories, which might be available for a cheaper price at the nearby store or in a new online start-up.
In earlier times, designers used to spend on designing an entire collection which was sure to become a hit. But the new age Instagrammers are less loyal to designers’ collection and flaunt their own micro-trends.
To cope up with this, retailers are spending money on developing their social media image and using celebrities to endorse their collection. Another way is to buy fabric in bulk which can later be transformed to trends surfacing in the market.
Failing to predict future have led to their demise
The apparel industry felt the heat of all these pressures when the retail stores started closing, not even leaving big retailers like NastyGal which went bankrupt in 2017. Others have also either cut down on their stores or are getting acquired by another group. The disruption in retail has been well accepted by the online retailers than retail stores. With the help of technology, they are able to well capture the needs of the customers such as customization.