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US apparel market facing tough times

A Bloomberg report recording changes in US consumer behaviour of income spending on apparel shows early signs of big trouble ahead for the apparel industry. The US apparel industry has been seen a dip since last few years and it seems to be true if one looks at the number of bankruptcy cases filed by apparel retailers. One was doubtful that this was largely due to the E-commerce marketplace where E-companies giants, such as Amazon, roamed the streets like a Titian resulting in brick and mortar stores failing to attract customers.

However, that is not the big picture. Systemic changes are happening in consumer spending behaviour which is narrowing the leverage space. Post ’96, the share of clothing spend for US households was 6.2 per cent, however today, the share has shrunk by 50 per cent to about 3.2 per cent despite the fact that income and spending by Americans has significantly increased during this period.

The report discloses apparel’s share has been chewed into by travel, dining out and other adventure sports which offered more satisfaction to consumers. The expenditure on ‘consumer experience’ – largely travel and food – has zoomed to 18 per cent of spending. Expenses on technology itself accounts for 3.4 per cent of spending — which is more than that of apparel .

The choice and the flexibility to wear any kind of casual clothing during most occasions, including office, has been one of the reasons for the falling expenditure on clothing. To add to chaos, price of apparel has been going south as production cost fell due to the moving of manufacturing in less expensive labour markets and its consequent price competitiveness have become the silver bullet of success.