Bright Spots in the Increasingly Less Sexy Apparel Sector

Online, Athleisure carry the weight as apparel appeal wanes

Author: Andria Cheng

March 6, 2017

Shifting consumer preference and retailers’ own failure to excite with new, must-have fashion have led to many store sales declines and closings, but there are some bright spots on the apparel market.

US clothing sales rose 3% in 2016 to reach $218.7 billion, the biggest gain since 2013, according to market research firm NPD Group. Online was a key driver of that growth. Ecommerce spending made up 19% of total US clothing sales last year, compared with 11% in 2011, NPD data showed.

And it wasn’t such ecommerce gains at legacy brands like Macy’s and JC Penney that drove the online growth. Pure-play web retailers were the key contributor, NPD said.

Amazon was perhaps the best highlight of that. The online giant has been moving rapidly in the apparel space, hosting Fashion Week events and reportedly planning additional private label apparel lines. On its jobs site, it’s currently looking to fill over 100 open fashion positions and said its “fashion properties,” which also include Shopbop and East Dane websites, represent one of its fastest-growing units.

(Morgan Stanley said in a May 2016 report that Amazon was already the No. 2 U.S. apparel seller behind Walmart and could see its share of the overall U.S. apparel market increasing to 19% by 2020 from about 7%.)

Within the brick-and-mortar space, off-price retailers were a bright spot, NPD said. The notable winner there was T.J. Maxx and Marshalls parent TJX Cos. TJX reported a 6% comparable sales gain during the holiday quarter, compared to declines at retailers from Victoria’s Secret and Gap brand to Macy’s and Nordstrom.

Style-wise, NPD’s data showed that the athleisure trend, which has been embraced by retailers from Forever 21 on the low end to Chanel on the high end, still has legs: Athleisure-styled clothing sales jumped 11% last year to $45.9 billion, representing more than one-fifth of the total U.S. apparel market.

That marked the third year that athleisure apparel registered double-digit gains, said Marshal Cohen, NPD’s chief industry analyst, in an interview.

Millennials, already the big disruptor on other retail trends, led the demand for athleisure, a casual comfort trend that appeals to all age groups, NPD found.

Interestingly, millennials’ spending on experiences that they can then post on social media have also led to one surprise bright spot in the apparel sector: sales of tailored clothing and dresses, which both rose 5%.

“With their propensity for creating these memories, they have to look the part,” Cohen said. They “need some updating for the wardrobe. We are seeing some nice growth with tailored clothing and dresses becoming a big trend over the last year.”