Report: Retail Is Robust Again

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The fickle finger of fast fashion just got longer in the U.S. market. According to findings from the Consumer Edge Insight Center fast fashion, defined as the reproduction of high-end fashion designs cheaply and selling them at retail for the masses, is even holding its own against luxury fashion.

Retailers such as Shein, Temu, The Gap, Zara, Uniqlo, Topshop, and H&M are examples of fast-fashion retailers.

Consumer Edge, a data-driven insights company, called out Shein, a Chinese company, as a big winner in the category because of its robust growth in 2023, noting that in the first 10 months of this year, Shein’s sales increased by more than 20% compared to the same period in 2022.

The increase gave Shein the biggest share of fast fashion in the U.S. market with roughly 40%, while global Swedish retailer H&M saw U.S. consumer spending fall by about two percentage points in the same period. Meanwhile, U.S. sales for Japanese retailer Uniqlo rose 28% in 2023.

The growth for clothiers in this category was somewhat bad news for luxury brands such as Louis Vuitton, Gucci, and Burberry. While it’s unlikely that consumers of these brands are the same ones who purchase fast fashion, Consumer Edge pointed to declines in discretionary spending growth for those high-end fashion labels.

French brand Hermés proved an exception: spending on this brand was up almost 15% through October this year.

Michael Gunther, Vice President, Head of Insights at Consumer Edge, described 2023’s “macroeconomic” environment as being a factor in these respective increases and declines. Real incomes have been squeezed this year, he said, and because fast fashion is more affordable and on trend, these retailers have been able to increase market share.

Even among shoppers above the age of 35, spending on luxury fashion brands fell just slightly, from 10% in 2022 to 9% in 2023. Furthermore, consumer spending in the DTC luxury category  was down 7% this year compared to last.

However, Gunther wouldn’t be surprised if the fast-fashion category contracted at some point overall, given that clothes shoppers aged 35 and under tend to be very environmentally conscious. In a nod to sustainability the government of France subsidizes individuals to repair their worn-out clothing and footwear if possible, rather than buy new items to reduce textiles waste.

As CNN reported back in July, “a simple piece of restitching will receive a €6 subsidy, while resoling a pair of shows will qualify for a €25 rebate.”

Meanwhile, global transaction data through November from Consumer Edge showed robust pre-holiday shopping in several categories, and the National Retail Federation reported that this shopping season would revert to pre-pandemic levels, and perhaps even set records in November and December. The NRF projected consumer spending at retail to grow up to $966 billion, a 4% jump more than in 2022’s spend of $957.3 billion.

In a statement, Matthew Shay, President and CEO of the NRF, said, “Overall household finances remain in good shape and will continue to support the consumer’s ability to spend.”

Looking at year-over-year (YoY) trends from November 2022 compared to November 2023, data from Consumer Edge showed positive retail growth across categories online (up 10.4%), in the pet products and services vertical (up nearly 5%), and in Discount Club (up 3.5%).

Spending dropped across apparel, accessories, and footwear sub-industries, except for those items in the men’s category, where spending was up a tiny 0.4%.

Shoppers appeared to pull back this season on luxury brands and those within the home and garden vertical.

Now that Christmas is over, don’t expect retailers to raise a glass just yet. They are preparing for the costly season of returns, which Gartner called a “trillion-dollar problem.” To that end, some retailers are requiring customers to pay the shipping charges on any returns, whether the items are clothing or toys or anything else non-perishable.

Kathleen Sampey
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