Apparel Industry Overview
The US apparel industry is currently valued at $364.87 billion and is forecast to hit $386.59 billion in the near future (2023) at a CAGR of 1.9%. While efforts are being intensified to recall and curb importation of apparel and outsourcing of its production, bulk (more than 95%) of the apparel in the US markets are either imported or outsourced to overseas companies for production. COVID-19, technology, and the entrance of new players are some factors disrupting the US market.
Current State of the Industry
- The US apparel industry is currently worth $364.87 billion.
- From 2019 to 2020, the US apparel market grew by two percent.
- 77.8% of the industry revenue will be generated through offline sales, while 22.2% will be from online sales.
- Over 95% of the apparel in the US market is imported from overseas.
- China accounts for approximately 40% of the total import.
- Approximately three percent of the total apparel in the US is manufacture in the country.
- The current outbreak of COVID-19 has made importation from China near impossible, and retailers in the US industry are looking elsewhere. For example, Trybus, a Texas-based menswear company that previously sourced about 30% of its supply from China, is currently sourcing its supply from other countries for its supply to reduce its dependence on China.
- Some apparel manufacturers in the US have diversified into the production of face masks in response to the urgent need for personal protective equipment (PPE) by healthcare workers in the front line of fighting COVID-19, an example of such company including the Los Angeles Apparel.
Growth of Industry Category
- The apparel industry in the US is segmented into the following categories:
- The women's segment of the industry is the largest in terms of revenue and volume of apparel.
- In terms of revenue, this segment of the industry accounts for $190.79 billion and is predicted to reach $202.37 billion by 2023.
- Currently, the volume of women’s apparel expected to be sold in the US is 11.79 billion and is projected to hit 12.28 billion by 2023.
- In terms of revenue, the growth of this segment is forecast to decline from 2.06% in 2020 to 1.96% by 2023.
- Revenue-wise, the men’s category is projected to grow from $119.12 billion in 2020 to reach $126.96 billion by 2023.
- In terms of revenue, the growth of this segment is predicted to decline from 2.21% in 2020 to 2.14% by 2023.
- The men’s segment is forecast to increase from 7.68 billion in 2020 to 8.03 billion by 2023 in terms of volume.
- The children’s segment of the industry is predicted to grow from 10.59 billion in 2020 to 10.87 billion by 2023 in terms of volume.
- In terms of revenue, the children’s segment is forecast to increase from $54.96 billion in 2020 to $57.25 billion by 2023.
- Revenue-wise, the growth of this segment will increase from 1.29% in 2020 to 1.33% by 2023.
Segmentation Based on Channel
- The industry is categorized into two segments based on sales channels, online and offline.
- Offline is the largest, accounting for 78% of the industry revenue in 2020. The share of this segment is forecast to decline to 69% by 2023.
- In 2020, the online segment accounts for 22% of the US apparel industry revenue. The market share of this segment is forecast to grow to hit 31% by 2023.
Segmentation Based on Luxury and Non-Luxury Brand
- The industry is segmented into luxury and non-luxury brands.
- Currently, non-luxury brands of the industry in the US account for the largest market share, 95%, while luxury brands account for five percent.
- The non-luxury and luxury are forecast to grow at a flat rate from 2020 through 2023, each segment retaining their share of the market of 95% and five percent, respectively.
Future State of the Industry
- The US apparel industry is forecast to reach $386.59 billion by 2023.
- In terms of volume, 31.17 billion pieces are expected to be sold by 2023. Men, women, and children apparel segments will account for 12.28 billion, 8.03 billion, and 10.87 billion, respectively.
- Revenue generated the online segment is forecast to increase to 30.6%, while offline sales will drop to 69.4% by 2023.
- The luxury and non-luxury segments of the industry are predicted to experience flat growth during this period. The luxury segment will account for five percent of the industry’s revenue, while the non-luxury segment will account for 95% from 2020 through 2023.
- Apparel production outsourced to countries overseas will be brought back to the US, according to experts, this will be driven by growing demand for made in the US apparel by customers.
Factors Expected to Disrupt the Industry
- The US-China trade war will disrupt the US apparel industry both in short and long terms. The trade war and outbreak of COVID-19 have made importation of apparel from China by retailers in the US difficult through the imposition of 25% added tariffs. Hence, industry players in the US have diversified, shifted outsourcing to other countries like Vietnam, strategically grown their production capacity, lots of companies are reshoring previously offshored jobs, and are employing more staff to meet up with customers' demand.
- Technologies such as eCommerce platforms, sewbots, and 3D printing are predicted to revolutionize and impact the way apparel manufacturers meet customers' demand and improve their overall experience. These technologies provide speed, increased flexibility, and cost-effective ways for manufacturers to achieve on-demand manufacturing.
- Automation and computerized production are predicted to disrupt the dynamics of production in the US apparel Industry. According to experts, this will drive manufacturing and boost employment in the US.
- The recent introduction of new service lines like on-demand apparel assembly and design-to-delivery solutions is expected to disrupt the US market in the near future. According to an industry expert, these solutions seamlessly integrate with the brand's existing business structure to directly offer services to their customers.
- The entrance of new players such as Unmade, RealReal, and Poshmark into the industry will disrupt the US apparel market, Unmade offers software that enables companies to seamlessly manufacture, print and customize apparel on-demand, while RealReal and Poshmark focus sells used (second hand) apparel, and connect buyers and sellers.