From frugal shoppers to consumers who easily abandon a brand, fashion apparel retailing is a tough business right now, and it’s likely to get tougher. But getting a grip on consumer spending trends may help companies better navigate the market.
Here are five key trends impacting business right now:
The New Frugality
Analysts and economists note that consumer behavior following the Great Recession changed, and a larger number of shoppers are more frugal than they were prior – despite having greater disposable income. At this point, it’s unclear if this is a permanent change, but one thing is clear: consumers — of all income tiers — are hungry for values and markdowns.
Millennials, Millennials and Millennials
Millennials are increasingly sought out by retailers and brands. And with good reason since they’re the largest generation ever. But Millennials come with some baggage: many are still living at home and are saddled with student debt. They are also, generally speaking, quick to switch loyalty to brands. Still, they are increasingly earning more money and are poised to spend it.
As a larger number of people shy away from home ownership, rents across the country have risen significantly — especially in markets such as New York, Los Angeles and Tokyo. As a percent of total household income, rents in some of these markets are garnering a 40 to 50 percent share, which means less money to spend on apparel and accessories.
Even as the so-called “gas dividend” puts more money into the pockets of consumers, people are using most of it on experiences and eating out rather than on apparel. And they’re also buying more cars and SUVs. Between the new cars, related maintenance and money spent on traveling to those “experiences,” middle-income households dole out 17.2 percent, or an average of $6,066, of their annual budgets on transportation, according to the Bureau of Economic Analysis.
Mainline is Online
Global online commerce is pegged to grow 25 percent this year, which is why many companies are sinking money into Web sites and related investments. If a company’s online presence is lacking, now is the time to set up the game.