US Fashion Industry: State of Department Stores
At present, the US clothing stores includes about 95,000 establishments with combined annual revenue of almost $200 billion in 2019.
CURRENT STATE OF FASHION/APPAREL/CLOTHING STORES IN US
- The US clothing store industry includes about 95,000 establishments with combined annual revenue of almost $200 billion.
- The key US clothing stores include TJX (TJ Maxx, Marshalls), Gap, and L Brands. The US industry is concentrated, with 50 of the largest companies accounting for about 70% of the industry revenue.
- At present, the U.S. apparel market is the largest in the world, with retail sales regularly exceeding $15 billion on a monthly basis.
- "In May 2019, U.S. apparel retail store sales amounted to approximately $16.75 billion."
- Women clothing stores in the US have had a positive growth in the number of stores. The total number of stores is currently 61,014, with a total revenue of $43 billion.
- Family clothing stores consist of retail establishments that sell apparel for men, women and children without a clear specialization in gender or age. There are around 49,440 stores with a total revenue of $112 billion.
- Children clothing stores consists of establishments that specialize in apparel for children under the age of 17. There are around 16,324 stores with a total revenue of $10 billion.
DISTRUPTION IN THE SEGMENT AND WHY
FLUCTUATING DISPOSABLE INCOME
- The fluctuations in the household disposable income disrupts the demand for clothing. An increase in the per-capital disposable income allows consumers to increase their discretionary spending, including spending on high-end clothing. In 2019, the per-capita disposable income is expected to increase, representing a potential opportunity for the industry.
- The women clothing stores are facing a potential threat from supercenters and online stores that are consistently providing clothing at a large discount to consumers.
- The increase in the number of ecommerce players is also disrupting the clothing retail store business, as the percentage of services conducted online is expected to increase in the next few years.
- Amazon is expected to make a big leap in the apparel market this year, posing a potential threat to the traditional apparel department stores, which are already losing market share.
- With Amazon's discounts on clothes, "Prime shoppers are now two times more likely than non-Prime shoppers to buy clothes on Amazon.com".
USED CLOTHES MARKET:
- The used clothes market is expected to reach $24 billion industry, potentially disrupting the major clothing department stores such as Zara and H&M.
- It is predicted that, "around 13 percent of the clothes in women’s closets are likely to be second hand, up from 6 percent in 2018."
- "As sustainable fashion becomes a necessity as well as a trend, shoppers are looking to fill their closets in different ways", moving towards second hand apparel, which means that there will be a decline in browsing through thrift stores. This also makes it easier for people to buy and sell used clothing through online sites.
WHERE THE BUSINESS IS GOING AND WHY
- The US family clothing stores have experienced moderate growth of 0.9% in revenue over the last five years, including a 0.8% growth in 2019 alone.
- The growth is driven by the emergent trend of luxury malls and specialty clothing stores at the expense of traditional malls with stores such as Sears and J.C. Penny.
- There has also been a decline in the women's clothing stores segment revenue by 1.4% in the past five years, decreasing to $43.1 billion. The sector has also seen a decline of 1.1% in 2019. The decline is caused by the declining mall traffic and competition from thriving superstore retailers.
- Children and infant clothing stores have seen a decline in the growth over past five-year1.5% wherein, "while macroeconomic growth has encouraged shoppers to splurge on high-end children's clothing, many apparel purchases have been captured by industries that directly compete for consumer dollars such as online clothing stores.(Source 5)
- With the growing ecommerce apparel stores, Morgan Stanley is predicting that "department stores will only comprise about 8 percent of the total U.S. apparel market in 2022, compared to 24 percent in 2006".
- It is predicted that, "by 2028, the used-fashion market [will] skyrocket in value to $64 billion in the U.S., while fast-fashion will only reach $44 billion."