What Not to Wear: Shoe and Fashion Accessories Sales Fall

Drop suggests fashion industry woes not over yet

Author: Andria Cheng

April 17, 2017

Buying a handbag, a necklace or a pair of shoes has long been a good way for consumers to spice up their wardrobe, especially when they don’t have extra money to splurge on a new outfit, but there are some signs that this bright spot in the fashion industry may be fading.

Sales of shoes and fashion accessories, together representing about 35% of the $334 billion US retail fashion industry, have declined. Shoes dropped 1% to $65 billion, and accessories fell 7% to $51 billion in the year ended February 2017, following gains a year earlier, according to Port Washington, NY-based market research firm The NPD Group.

Worse yet, not only are consumers spending less, they are buying fewer items as well, the data showed. NPD didn’t respond to a request seeking additional comment.

“Consumers tend to build their wardrobes through accessories and footwear, giving their outfit a fresh look, so when sales of either of these industries slow or decline it signals a decline in fashion as a priority.”

“The losses happening within footwear and fashion accessories are leading indicators of the fundamental changes occurring within the whole of fashion at retail,” said Marshal Cohen, NPD Group’s chief industry analyst, in a statement. “Consumers tend to build their wardrobes through accessories and footwear, giving their outfit a fresh look, so when sales of either of these industries slow or decline it signals a decline in fashion as a priority.”

In comparison, Euromonitor data showed US apparel sales overall, including fashion accessories, in 2016 rose 2.1% to $273.7 billion, slowing from a 2.9% increase a year earlier. Sports-inspired apparel, part of the so-called athleisure trend, was the driver, posting a 6.3% jump in sales last year, Euromonitor data showed.

Euromonitor’s data also painted a more encouraging view of shoe sales, which rose 5.5% to $80 billion last year despite slowing from a previous-year 6.3% increase.

The athleisure trend also has been a bright spot in the shoe category, even though it’s not enough to make up for a 6% decline in fashion footwear sales, NPD said. (As a side note in the athletic fashion trend, a separate NPD study also released on Monday showed that demand for long-lasting and waterproof makeup is driving an 11% jump in US prestige makeup sales in the year through February as consumers want to look great even during and post-workout.)

Handbag Slump

Meanwhile, on the fashion accessories side, while luggage and backpack sales have been increasing as experience-driven consumers want to feature them as part of their Instagram travel feed, NPD data showed overall handbag sales in the year through February slumped $1 billion to $7.3 billion, leading the decline in the category.

Luggage sales have outpaced handbag sales, according to Euromonitor data, by comparison, which showed handbag sales last year rose 2.4% to $24.3 billion, lagging the 3.9% growth to $3.35 billion in luggage sales.

The handbag and shoe sales data echoed some of the comments and sales declines at a wide variety of retailers from high-end department stores to mid-priced or low-end specialty apparel and shoe retailers.

Macy’s, which is closing some stores amid declining comparable store sales and traffic, for instance, has noted that consumers, led by millennials, are shifting more of their spending to experiences and services over purchasing material things. On the lower end, Payless ShoeSource, a 4,400-store chain, earlier this month filed for bankruptcy protection.

In another example, upscale handbag label Michael Kors, long a Wall Street darling because of its strong handbag demand, has seen a reversal of fortune. In the latest quarterly announcement, the company said North America comparable sales declined in the mid-single digit percentage while department store and other wholesale sales in the Americas region tumbled in the “mid-teens” in part because Michael Kors and rivals like Coach deliberately tried to reduce their distribution to the promotion-heavy department stores.

“Many of our department store partners have been offering promotions, if it's not every two weeks, it's every third week, so there's something going on all the time,” said Michael Kors CEO John Idol in the most recent earnings call. “We're going to really consolidate that down to four times a year. We believe that's going to significantly reduce the amount of off-price business that we're doing.”

Coach CEO Victor Luis also said earlier this year that the negative trends in the US department stores have continued to impact the North American “premium” bag and accessories market.

Department stores aren’t the only channel where handbags have been heavily discounted. In the outlet space, average retail price per unit has dropped in the past few quarters because it’s become “extremely promotional,” Idol said. He added that Michael Kors’s rivals are giving even deeper discounts “in many cases.” The difference: customer traffic is less of an issue for the outlets, he said.

The blame game aside, the fashion industry in the long run may have itself to blame for not being able to respond fast enough to shifting consumer demands and behavior. The luxury industry, for instance, is behind on its ecommerce strategy.

In another telling example, Idol said while demand for Michael Kors Access line of smartwatches has exceeded expectations and its “momentum” in athletic footwear business remains strong, he admitted licensed “fashion watch” sales remain “challenged.” Meanwhile, a decline in its overall average unit retail price is hurt by the continued fashion trend toward cross-body and small leather goods.