US Market Size Fashion Retail Tech
While the size of the United States market for fashion retail technology is not readily available in the public domain, there were statistics that enabled us to triangulate the amount. Based on our computations, fashion retailers in the United States together have a revenue of EUR 221.810 billion, and of this total revenue, around 0.1632% or EUR 362 million is spent on industry-specific and business support applications. We, therefore, estimate that the size of the fashion retail technology market in the United States is around the same amount, that is, EUR 362 million. How we found these figures is explained in detail below.
An extensive search through recently published articles, reports, and presentations revealed that the current size of the United States market for fashion retail technology is not readily available. From an article published last year, we found that, globally, investments in fashion technology grew from USD 50 million in 2009 to USD 2.8 billion in 2014. However, these figures refer to the amount invested in fashion technology startups.
Since the desired market size could not be located in the public domain, we looked for numbers that we could use to triangulate the size. As suggested, we performed a top-down analysis and used the total revenue of fashion retailers in the United States as starting point. Below you will see how we narrowed this revenue down to the total application stack budget of fashion retailers in the United States. At each step below, we tried as much as possible to look for statistics that are specific to the United States fashion retail industry. In cases where we could not find such statistics, we searched for the next best numbers we could use.
ESTIMATED REVENUE OF FASHION RETAILERS IN THE UNITED STATES
Based on the North American Industry Classification System (NAICS), fashion retailers belong to the Clothing and Clothing Accessories Stores subsector, which has NAICS code 448. To find the total revenue of the fashion retailers in the United States, we consulted the United States Census Bureau's latest Annual Retail Trade Survey. We found that the latest survey was for the year 2016, and the results of the survey were last revised in March 2018.
An examination of the latest annual sales of retailers in the United States that belong to the Clothing and Clothing Accessories Stores subsector reveals that, during the period 2012-2016, the estimated annual sales of the subsector were as follows.
2012: USD 239,493 million
2013: USD 244,722 million
2014: USD 250,409 million
2015: USD 255,798 million
2016: USD 259,617 million
From these figures, we can estimate that the subsector's CAGR during the period 2012-2016 was 2%.
(USD 259,617 million/USD 239,493 million)^(1/4)-1 = 2%
If we assume that the subsector continues to grow at this CAGR, we can estimate that the subsector's revenue this year is around USD 270,106 million.
USD 259,617 million x 1.02 x 1.02 = USD 270,106 million
Then, if we use today's USD to EUR exchange rate of USD 1 = EUR 0.821197, we can see that USD 270,106 million converts to EUR 221,810 million.
USD 270,106 million x (EUR 0.821197/USD 1) = EUR 221,810 million
ESTIMATED TECHNOLOGY BUDGET OF FASHION RETAILERS IN THE UNITED STATES
The technology budget of fashion retailers or retailers in the United States, as a percentage of revenue, is not available in the public domain, but we found that according to Deloitte's 2016-2017 Global CIO Survey, companies belonging to the consumer business and retail industry typically spend 2.04% of their revenue on information technology (IT). This percentage almost matches the finding of research and advisory service firm CEB. On page 6 of its 2015-2016 report on the IT budget, CEB revealed that companies in the retail industry spend 2.1% of their revenue on IT.
If we assume that fashion retailers in the United States spend a similar percentage, that is, 2.04% of their revenue on technology, we can estimate that their total technology budget this year is around EUR 4,525 million.
EUR 221,810 million x 2.04% = EUR 4,525 million
ESTIMATED APPLICATION STACK BUDGET OF FASHION RETAILERS IN THE UNITED STATES
How retailers in the United States allocate their IT budget is not publicly available, but according to Spiceworks' report "The 2016 State of IT," the typical IT budget allocation of companies in North America is as follows.
Hardware - 31%
Software - 26%
Hosted/cloud-based services - 22%
Managed services - 14%
Don't know - 7%
Of the software budget, 9% is spent on industry-specific apps, while 7% is spent on business support apps. Of the hosted/cloud-based services budget, 7% is spent on business support apps, while 6% is spent on industry-specific apps. And, lastly, of the managed services budget, 7% is spent on managed business apps.
Assuming these same figures apply to the fashion retail industry in the United States, we can estimate the application stack budget of fashion retailers in the United States as follows.
IT budget: USD EUR 4,525 million
Software budget: EUR 4,525 million x 26% = EUR 1,176.5 million
>>Application stack portion: EUR 1,176.5 million x (9% + 7%) = EUR 188.24 million
Hosted/cloud-based services budget: EUR 4,525 million x 22% = EUR 995.5 million
>>Application stack portion: EUR 995.5 million x (7% + 6%) = EUR 129.415 million
Managed services budget: EUR 4,525 million x 14% = EUR 633.5 million
>>Application stack portion: EUR 633.5 million x 7% = EUR 44.345 million
Total application stack budget: EUR 188.24 million + EUR 129.415 million + EUR 44.345 million = EUR 362 million
The preceding calculations show that the total application stack budget of fashion retailers in the United States is around EUR 362 million.
This total application stack budget accounts for 8% of the fashion retailers' technology budget and 0.1632% of the fashion retailers' revenue.
EUR 362 million/EUR 4,525 million = 8%
EUR 362 million/EUR 221,810 million = 0.1632%
ESTIMATED SIZE OF THE UNITED STATES FASHION RETAIL TECHNOLOGY MARKET
Given that fashion retailers in the United States have an estimated application stack budget of EUR 362 million in total, we infer that the size of the United States fashion retail tech market is around the same amount.
Despite the lack of pre-compiled statistics signifying the size of the United States market for fashion retail technology, we found statistics that permitted us to estimate the amount. Our calculations show that fashion retailers in the United States have a combined revenue of approximately EUR 221.810 billion, and around EUR 362 million or 0.1632% of this revenue is allocated to industry-specific and business support applications. This led us to the estimate that the United States fashion retail technology market is around EUR 362 million.