Mass merchants’ viselike grip on value appears to be slipping.
As U.S. consumers cautiously return to spending during the slow-motion economic recovery, the nation’s discounters collectively experienced a 7.5 percent decline in apparel sales during the 12 months ended in April and saw their share of the U.S. apparel market drop below 20 percent, to 19.3 percent from 21.2 percent in the prior year, according to figures released Tuesday by The NPD Group, the Port Washington, N.Y.-based research organization.
The drop in discounters’ apparel sales, to $37.34 billion from $40.36 billion in the earlier period, came as every other major retail channel — led by specialty stores and including department stores, national chains, off-price retailers and factory outlets — experienced an increase in the category and either a flat performance or growth in apparel market share.
Analysts and other observers agreed that the drop in the discounters’ performance stemmed principally from the weakness of Wal-Mart Stores Inc.’s apparel operations and those of Sears Holdings Corp.’s Sears and Kmart operations, what is deemed a temporary retreat by Target Corp. and softness in the fairly basic apparel assortments of dollar stores. And they noted that, as consumers gingerly reassert their power as purchasers, they’re seeking the assurance they get from buying branded apparel, whether through national brands, exclusive brands or high-visibility private labels.
Wal-Mart’s stumbles in apparel have been well documented. According to the firm’s annual report, apparel slid to 7 percent of sales in its U.S. discount stores last year, or about $18.22 billion, from 8 percent, or $20.79 billion, in fiscal 2009, a nearly $2.6 billion surrender of sales in the category.
“Apparel has been a trouble spot at Wal-Mart for years,” said Craig Johnson, president of Customer Growth Partners, a research and consulting firm. “They say it’s a work in progress, possibly the longest work in progress since New York’s Second Avenue subway, but the last year or so, they’ve totally taken their eye off the ball. Anything beyond basics is being ceded to others.”
Marshal Cohen, chief industry analyst at NPD, described the drop-off among the mass merchants as “a big loss of momentum they gained during the heat of the recession. Even by promoting value, which in their words is ‘shop here, we have the lowest price,’ consumers have migrated away from this ‘lowest price’ to ‘better value.’”
Overall apparel sales gained 1.4 percent, to $193.2 billion from $190.61 billion, during the 12-month span, with specialty stores gaining ground, expanding volume to $62.85 billion from $59.86 billion, and extending their sector-leading market share to 32.5 percent from 31.4 percent.
Although down, mass merchants ranked second in volume, followed by department stores, up 2.6 percent to $25.96 billion in apparel sales with market share up to 13.4 percent from 13.3 percent, and national chains, which moved up 1.7 percent to $25.14 billion on an unchanged 13 percent share of market. Off-price retailers saw apparel sales rise 2.1 percent, to $18.42 billion, and their market share in the category tick up slightly to 9.5 percent.
Direct mail and e-tail pure plays saw their apparel sales drop 1.3 percent, to $10.4 billion, but online apparel sales overall grew 12 percent to $17.2 billion. Factory outlets’ apparel sales jumped 17.8 percent, to $3.98 billion, lifting their market share to 2.1 percent from 1.8 percent. Warehouse clubs also saw a significant pickup in apparel volume, growing 24.7 percent to $1.95 billion, with Wal-Mart’s Sam’s Club division being among the beneficiaries.
Citing the strong showing by factory outlets and warehouse clubs, Cohen noted, “Why did these channels achieve this kind of growth and factory outlets even beat out the online channel for sales growth? One word — value. Consumers are looking for brands they either already have, or that they trust. They want products that are tried and trusted and they don’t mind spending money on them.”
CGP’s Johnson said, “Apparel has always been a brand proposition and what is a brand other than a promise a company makes to a customer? You have a wide variety of players — Macy’s, Kohl’s, off-pricers and warehouse clubs, just to name a few — who are getting the job done with brands, whether others’ or their own. At Wal-Mart, the promise is a dollar sign, without the brand patina. Target tries to have a little of both and, from what we’ve seen since April, they’re getting a good response.”
Mark Montagna, senior analyst at Avondale Partners, also mentioned Kohl’s as a retailer who’d been building brand strength through exclusive partnership with designers such as Vera Wang and its upcoming tie-in with Jennifer Lopez and Marc Anthony.
“Brands do seem to be driving the process and making a bigger difference,” he said. “If you look at the stocks of companies with important apparel brands — Polo, PVH — they’re doing well. The off-pricers have constant freshness and brand names.”
Montagna views heightened brand awareness as a logical consequence of the current consumer mind-set. “The emphasis is still on survival,” he said. “People are holding on. It’s not like wages are going up or that unemployment has come down. We’re in a permanent shift towards value. If you offer fashion and you have the right fashion, you’re much less of a commodity player and that gives you some pricing power. People are looking for fashion and brands, but the price they’re willing to pay for that great fashion is a little lower than it was.”
EXCLUSIVE: @tomford is opening its first-ever beauty store. The boutique, which opens November 20 in London’s Covent Gardens, was designed with the over-the-top glam Ford is known for. Read the full story on WWD.com, link in bio. #wwdbeauty #wwdnews (📷: Simon Wagner) #TomFordBeauty
New York-based DJ @harleyvnewton threw a party to celebrate the holiday collection of her dress and pajama line @hvn at the Ladurée Beverly Hills. It Girls @katebosworth, @rashidajones and more joined in on the fun, which included cocktails, croque monsieur sandwiches and a photo booth. #wwdfashion (📷: Owen Kolasinski/BFA.com)
For the holidays, @Burberry partnered with 20-year-old artist @blondeymccoy on a series of three outdoor murals in downtown Manhattan. The murals are McCoy’s interpretation of a Christmas eve party, the idea of charity and the spirit of family. His third mural, pictured here, is the most personal. The image depicts McCoy’s grandparents and father in London’s Trafalgar Square in the Seventies. “My work often features lots of sentimental objects.” #wwdeye
For spring 2018, designers applied bold colors and cartoonish motifs on everything from sneakers and belts to key chains. See all the top men’s accessories trends on WWD.com. #wwdtrends (📷: George Chinsee; Prop Styling by @rnasti; Market Editor: @luiscampuzano)
The @dior-sponsored @guggenheim international gala pre-party has a history of drawing cool-girl musical acts to serenade the crowd –– and last night was no exception. @haimtheband performed songs both new and old, and lured a star-studded audience with the likes of Rebecca Hall, Kate Mara, Mamoudou Athie and more. #wwdeye (📷: @lexieblacklock)
In a partnership between the @metopera and the @englishnationalopera, “Marnie” was born. The opera, with costumes sponsored by @mrporterlive, is an adaptation of the 1961 thriller by Winston Graham. Arianne Phillips, who created the costumes, is no rookie: She’s styled Madonna for her tours and created costumes for a myriad of films in the past. Read WWD’s interview with Phillips, where she talks about her inspiration for the opera’s costumes on WWD.com #wwdfashion
@barneysnyc took a different approach to their holiday windows this year. Instead of Christmas decor, Barneys tapped @thehaasbrothers to tell a story of positivity, gratitude and inclusivity via heartwarming silliness and humor. “It’s about kids and it’s about coming together and being family and loving each other,” said Simon Haas. #wwdfashion (📷: @joshuascottphoto)
Beauty influencer @kandeejohnson makes her foray into hair care with a collaboration with @ogx_beauty — making it the first time that OGX has teamed up for a product creation. The collab includes shampoos and conditioners in three scents. At 39 and a mom, Johnson is a different profile than the emerging social media stars, but is considered one of the pioneers of the digital beauty influencer world. Read WWD’s interview with her on wwd.com, including the strangest beauty product she’s ever tried #wwdbeauty