ECommerce' retail clothing market- growth
There are clear indications that the Direct-to-Consumer (D2C) eCommerce strategy "is causing a seismic shift" in the retail clothing market. Traditional clothing and apparel retailers are making D2C much more a key part of their strategy and smaller players are having a disruptive effect on the market by bypassing traditional retailers. That said, the only preexisting information that is publicly available combines all eCommerce data under one umbrella for the entire apparel and accessories market. I was not able to find any data that separates the D2C market from these overall numbers or that would allow me to triangulate an accurate estimate of the D2C market specifically. Please see below for an outline of my research methodology, as well as a deep dive into the key findings I uncovered about the eCommerce retail clothing market in general.
A thorough search of the publicly available information revealed no sources that break out D2C data from the overall eCommerce retail clothing market. This is primarily due to the fact that the D2C business is nearly impossible to differentiate from the general e-commerce data without limiting the analysis to specific companies known to engage primarily in the D2C model. Large and established retailers like Nike are increasingly using the direct-to-consumer model in their own eCommerce businesses, so their sales that come from this channel are included in overall eCommerce numbers. This, combined with the lack of available data about smaller companies that primarily rely on a D2C model, made it impossible to provide an accurate estimate of the D2C market growth specifically.
While I couldn't find data that specifically shows the growth of the D2C market, I was able to find data showing the growth of the eCommerce retail clothing market in general. I also found indications that the D2C model is becoming increasingly important, and seeing rapid growth in adoption, within the eCommerce retail clothing market.
Here are some key insights from what I found:
1. Overall retail sales performance (not just in clothing) is strong in the U.S., but the retail market's growth is primarily driven by online retail sales, which grew 7% faster than the retail market as a whole in 2016. In 2017, U.S. online retail grew faster than it has since 2011, representing 13% of total retail sales and 49% of the growth.
This is causing traditional retailers to adjust to more online tactics, while online retailers like Bonobos are experimenting more with physical "showrooms" to bridge the gap between virtual and real-world experiences of their products. In short, the lines are being blurred more and more between online and traditional retail.
2. Online apparel sales represent a growing proportion of overall apparel sales and are growing faster than eCommerce sales in general. Online apparel sales represented 19% of total apparel sales in 2016, up from 11% in 2011. They also grew 19% from 2014 to 2015, faster than the growth rate of overall eCommerce sales, "which rose 14.6% YoY in 2015." A 2016 Statista report estimates "the online penetration of the apparel and accessories category will reach 25% in four years." Another report notes that the online penetration was 15.5% of total apparel sales in 2015, meaning if estimates are correct, that online apparel sales could see a growth of nearly 10% over five years (2015-2020)
3. eCommerce retail clothing competition is increasing and large retailers are looking more and more to a Direct-to-Consumer model. Nike plans for D2C sales to grow in five years "from $6.6 billion in fiscal 2015 to $16 billion by fiscal 2020." Under Armour's D2C sales made up 30% of its revenue in 2015. If these large retailers are any indication, the D2C model and market is only going to increase in relevance and influence.
Despite the limited available data on the D2C eCommerce retail clothing market, specifically, I was able to uncover data and insights that show the eCommerce market is growing rapidly, in general, and the D2C model is a key driver of that growth. Traditional clothing retailers and smaller companies are both placing a big emphasis on using D2C to drive their eCommerce sales now and into the future.