The US still stays the world's largest apparel consumption market. However, the uncertainty brought by the recession has made a good deal of American consumers significantly cut back their spending on clothing. Also interestingly notable is that they appear to be more price-sensitive - many US consumers also plan prior to shopping, and minimize the impulsive purchase.
On average, US consumers spend approximately US$54 per month on clothing. Their average spending has significantly dropped, compared with US$77 in 2008, US$63 in 2009, and even US$60 in 2010, according to Cotton Incorporated's Lifestyle Monitor Survey. The three-year downward trend represents a decline of about 30%.
Prior to the financial crisis, US consumers used to enjoy shopping for discount bargains at mass merchants like Target and Walmart, because consistently low prices meant consumers did not even feel like they were splurging on everything from apparel to gardening supplies.
But since the recession, consumers in the US appear to be more discerning in how and where they spend their money.
One broad trend nearly all mass retailers have seen is the tendency of lower and lower middle income consumers to give priority to essential items, and that means consumables, said Greg Jacobson, Managing Editor of Mass Market Retailer magazine. "As a result, sales of consumables are increasing while areas such as home and apparel are having a hard time keeping up. For those consumers, areas like soft home, apparel and seasonal have become discretionary purchases in many cases."
The chart demonstrates US consumers' store preference for clothing shopping (Source: Cotton Incorporated Lifestyle Monitor Survey) |
On the contrary to the way US shoppers used to consume, they have now become committed to spending within their means and lowering their credit card debt. To do this, 56% are cutting back on spending when they shop, and 53% (62% of women) are staying out of stores where they are tempted to overspend, according to Candace Corlett, President of WSL Strategic Retail.
"At the top of the list of stores that are too tempting are the mass merchandisers. They go when they need to go, but avoid the browsing trips; which is why Walmart trips are down," she added.
According to Cotton Incorporated's survey, over time, there have been significantly increasing number of consumers who plan their apparel purchases. In 2008, 65% of consumers planned their purchases. That figure has increased to 71% today. At the same time, impulse shopping has dropped from 35% in 2008 to 29% in 2011.
"As you move down the range of household income, those low-tier shoppers have faced increased pressure on their spending on food and fuel, and their ability to go out and shop," said Ted Vaughan, a partner at Texas-based BDO Seidman Retail and Consumer.
He added that unemployment continued to have an effect on some of those shoppers lower down in the household income range, and that is affecting Target and Walmart more than some of the department stores.
Mass merchants still prevail in US
But mass merchants are still the most popular type of store for most clothing purchases, according to the survey's data, though that percentage has declined from 28% in 2009 to 24% in 2011.
Roseanne Morrison, Doneger Group's Fashion Director said that consumers at all levels are more carefully considering their expenses and prioritizing spending. "They are now buying with logic and precision about the end use of their purchases, and not overbuying."
"Shoppers are thinking about the lifespan of their purchases, and are considering quality over quantity," she added.
In addition, Ms Morrison highlighted: "There is also an increase in pricing due to cost of goods and production cost increases, so cheap is not really an option. Also, there has been a dip in the profits of the mass merchant specialty chains, so this trend is actually quantified."
From 2009 to 2011, the percentage of consumers saying Wal-Mart is their favorite clothing store has declined, from 10% to 6%, according to the survey.
Walmart has become proactive in wooing these customers back, said Mr Vaughn. "This downtrend started when the availability of credit started drying up. Walmart had done away with their layaway plan years ago, but they've re-instituted it this year to compensate. Looking at the holiday season, parents are still going to try to provide gifts for their children. With a layaway plan, customers can start shopping much earlier in the season."
On the other hand, exclusivity has become another enticement for shoppers. "Limited availability drives the customer out in droves. When they know they won't have infinite access to things, it is a great motivation to buy. Now, many stores are reporting that they are doing more regular price business than they have in eons, because they are carefully editing what they buy; buying into exclusives; and creating excitement through special events and in- store happenings. Also, the consumer is responsive to color right now, as color is emotional and happy," said Ms Morrison.
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