Apparel is among a few things consumers are now finding least affordable, as they cope with a fast-changing economy where their sense of wealth has diminished along with home prices.
That’s part of the picture emerging from findings of The NPD Group, whose chief industry analyst Marshal Cohen observed, “Apparel is no longer a primary purchase. People would rather spend $350 on a handbag and $29 on jeans — if they even buy the jeans at all.”
With what Cohen termed a “false sense of wealth” evaporating along with the declining values of people’s homes, apparel in February became the thing shoppers cited as putting the third-biggest strain on their wallets, following food and entertainment such as concerts, theater and sports events. “We’ve lost a lot of the impulse and feel-good shopping [for clothes],” Cohen said in an interview. “It’s like we went back to normalcy from a sense of false wealth.” By NPD’s measure, impulse spending accounts for about one-in-four apparel purchases made by the country’s consumers.
In contrast, about half of the adults responding to an NPD survey in February indicated they were least likely to change their spending habits on things such as books, cosmetics and fragrances — things they considered affordable.
Worries over the economy aren’t prompting most shoppers to head for stores closer to home or venues with goods less pricy than the ones they currently are visiting, say, going to discount stores or warehouse clubs instead of department stores or neighborhood supermarkets.
The reason, in Cohen’s view, is relatively low anxiety over job security. With fewer than half of those polled by NPD voicing doubts about the security of their job or their pay, people “are not likely to be that concerned” about where they’re shopping, the analyst projected. “Most don’t think of themselves as reckless spenders, anyway,” he continued. “Many are already thinking twice about buying a second, $5 cup of coffee or buying that special outfit.”
While eight in 10 adults among the nationally representative group said they think we’re in a “bad economy,” or heading there, only one in five said they’ve changed many or all of the places where they shop. Four in 10 expressed worries over their jobs or their pay.
Real home prices, as reported in Deloitte Research’s monthly index of consumer spending, fell by 9 percent in December 2007, compared with December 2006. And with gross domestic product growing by just 0.6 percent in the fourth quarter, Carl Steidtmann, Deloitte’s chief economist, said in a statement, “The risk of higher unemployment is increasing,” despite an only marginal increase in the December unemployment rate to 5 percent.
In times such as these, Cohen said, it’s becoming more important for apparel marketers to “educate people as to why buying an item is important. It is no longer just about the brand’s image.”