By  on June 11, 2008

Don't expect most consumers to start coughing up cash or credit for fashion goods anytime soon.

Apparel marketers are likely to encounter legions of penny-pinchers during the second half of 2008, projected a handful of observers, including Marshal Cohen, chief industry analyst at The NPD Group, whose forecast for fashion shopping is: "No deal, no sale."

"So far, apparel spending is [in] a free fall," observed Britt Beemer, chairman of America's Research Group. Not that it's a surprise to the consumer researcher. His random survey of 2,000 adults around the country, taken May 30-June 2, found people in six in 10 households saying that "at night they were talking about how they'll pay their bills" and "what they can cut spending on," and those in about four in 10 households were not planning to travel for a summer vacation.

This group of adults was "not even thinking about spending on apparel," Beemer said.

Retail business in May pointed to price shocks in a range of 40 chains tracked by WWD. Sales in stores open at least one year increased at six mass merchants and decreased at two, while they fell at seven department stores and rose at three. The offer of value was no guarantee of gains, though, as comparable-store sales dropped 25 percent at Old Navy, 7.2 percent at Kohl's and 0.7 percent at Target.

"It's as tough an apparel environment as I can remember in many years," said Carl Steidtmann, chief economist at Deloitte Research. "It's as tough if not more tough than the 1990-1991 recession, across the board. Consumers are being constrained by higher energy prices and declining employment."

While pent-up demand for warm weather clothes and the August back-to-school shopping ritual could spark apparel purchasing this summer, Cohen said such upswings would be unlikely to stem an overall decline in the money people will allocate for women's and men's wear this year. As a result, he foresees a 2.5 percent decrease in spending on apparel for adults in 2008, versus the 2.5 percent increase last year, and flat spending on clothes for kids. In 2007, $103 billion was expended for women's clothes in the U.S."America is in a complete retrenchment when it comes to spending money," Beemer said. More than half of the shoppers America's Research Group has been talking to this year have been making shopping lists for almost everything (not good news for marketers of an impulse purchase like apparel), as well as negotiating with merchants at stores and paying attention to ads offering deals.

"At some point, consumers will have to update their [warm-weather] wardrobes," NPD's Cohen predicted. "We'll get a late, little surge. Back-to-school will lift [purchases of] kids' clothes, but not adults.'"

By The Numbers: Consumer Outlook

45%: Portion of households with annual income north of $50,000 that will be changing spending habits to cut their outlays.

16%: Decline in people who went clothes shopping Memorial Day weekend versus last year, among 2,000 adults.

50%: Share of 1,000 women who said in March they hadn't paid enough attention to spring styles to think about buying apparel — up from just 6 percent in March 2007.

60%: Portion of adults making shopping lists for everything.

63%: People planning to take advantage of any sales promotions or programs.

67%: Consumers intending to spend less on other things to pay for gasoline and/or utility bills.
Source: Consumer surveys by Packaged Facts, America’s Research Group & The NPD Group, March through June 1.

Steidtmann, for one, isn't expecting the picture to change anytime soon. "We're in for a fairly long slog — at least until next year," the economist forecast. His gloomy outlook is based on weak demand for houses, with approximately one million homes on the market and home sales of only 75,000-100,000 units a month. "This indicates it's going to take a while," Steidtmann noted, citing the dampening of the wealth effect that has ensued as it gets tougher to borrow against the value of one's home.House prices fell nearly 12 percent in March and unemployment claims increased 9.8 percent in that month, according to the most recent Deloitte Research Leading Index of Consumer Spending, which comprises tax burden and real wages, as well as real home prices and initial unemployment claims. Two weeks ago, the Conference Board's Consumer Confidence Index slid to 57.2 from 62.8 in April — the fifth straight monthly decline, putting it near its lowest level since October 1992 when it stood at 54.6.

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