Retail Trend to Watch: Steep Declines in Clothing Sales
We simply aren’t spending as much on clothing as we used to. In 1920 Americans spent 38% of their income on food and 17% on clothing. Today Americans only spend 10% of their income on food and they spend even less on clothing now, just a paltry 2.4%. Clothing and accessories sales in the United States are expected to decline by $100 billion this year, a 22% decline over last year. Morgan Stanley believes the apparel market has “hit a ceiling” and is “going into structural decline.”
The pandemic has only accelerated this trend. 40% of consumers surveyed in the United States say they will reduce discretionary purchases to save money post COVID-19, which is not unexpected since millions of people are unemployed and whether you are unemployed or not the uncertainty created by the pandemic leaves consumers worried about the future.
Another blow to apparel sales is that most people aren’t going to buy new clothes if they have nowhere to go. Simon Wolfson, CEO of clothing retailer Next, explained the situation clearly when he said: “no one wants to buy clothes to sit at home in.” Next has been hit hard by the pandemic with its sales expected to drop by 25% this year. The underlying sources of apparel sales including events, parties, and office wear are heavily impacted by the pandemic reducing prospects for a quick recovery.
This May when retail spending increased by a month over month record of 17.7% in the United States it provided signs that a recovery is underway but concealed in the spending surge is how spending compares to May of last year. Retail sales in the United States declined by 6.1% in May of 2020 versus last year and apparel sales took the largest year over year hit of all categories by declining by 63.4%. This amplifies how much clothing and accessories stores are hurting and the end is not in sight.
Another trend that will subdue apparel sales is a move towards more sustainable fashion. If you have never struggled to buy food in your lifetime and then are forced to cue outside of a grocery store only to be confronted by stock outs when you finally get inside due to the pandemic you start to re-evaluate your priorities. Everyone is rethinking what is important and how they should spend their time and money going forward.
An interest in sustainable fashion has been growing for several years but most people were not voting with their dollars to create a real movement towards sustainability. But then comes a pandemic to shake everything up. “The pandemic will bring values around sustainability into sharp focus, intensifying discussions, and further polarizing views around materialism, over-consumption and irresponsible business practices," says The State of Fashion 2020, Coronavirus Update by the Business of Fashion. 15% of consumers surveyed in the United States and Europe say they will now spend more on ecologically and sustainable fashion, signaling an end to “extreme consumerism” a practice which involves buying large volumes of clothing.
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