The percentage of apparel purchased online has moved into solid double-digit territory in the last few years and is demonstrating growth even when other channels of distribution aren’t.
Michael McNamara, vice president of MasterCard Advisors SpendingPulse, moved through several years of data to demonstrate the continuing strength of e-commerce in an apparel market that remains relatively flat.
Although total apparel sales rose 1.9 percent in September, and women’s apparel sales trended down 1.2 percent, e-commerce purchases of apparel rose 13.4 percent during the month, and women’s wear was up 1 percent. Family apparel, which includes the volatile teen sector, was up 4.3 percent for the month, but e-commerce sales in the category skyrocketed 23.8 percent.
“Once you account for at least 10 percent of sales, you have a seat at the table,” McNamara said, adding that with growth comes the need to steadily invest in the category.
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E-commerce accounted for 9 percent of women’s wear purchases in 2007, but year-to-date in 2010 that number has risen to 13.8 percent.
“The figure is rising every year,” he said.
Online sales of women’s apparel grew 19.6 percent in 2008 and another 4 percent in 2009, as business was upended by the financial crisis. This year, through September, the online growth rate for the category is 8 percent.
E-commerce generated 13.2 percent of family apparel sales in April 2009, a figure that rose to 15.6 percent this past September.
The growth hasn’t been consistent and has fluctuated by category, McNamara noted. Online sales surged to 18.6 percent of family apparel sales in January, as the weather turned wintry, but fell back to a lower share in subsequent months.
By contrast, online purchases of jewelry fell 5.9 percent in September versus the same month in 2009. While the channel generally accounts for between 13 and 14 percent of sales, those transactions tend to be concentrated at lower price points as “people still favor bricks-and-mortar stores when they’re buying items for over $500 or $1,000,” McNamara said. “In jewelry, online sales tend to be more at lower price points.”
And for holiday, those sales tend to be made at the last minute. The top 10 days for jewelry purchasing last year accounted for 29.1 percent of all buying, and they were “basically the 10 days before Christmas.”
McNamara also displayed data showing how the concentration of shopping during the holiday season is vastly different online than it is in stores. The online shopping season for holiday will be under way shortly, he said, with 15 of the top 50 shopping days of the year for online shopping likely to fall in the last three weeks of November, earlier than for stores.
Discussing general market conditions, the MasterCard executive pointed out that strength in retail sales during the first quarter of the 2010 retail year led many merchants to beef up their purchases for the holiday season, but that conditions in the stores since haven’t lived up to that early promise.
“I’m not worrying about inventories as much as I was two years ago, but there could be an inventory situation” as stores work toward their holiday sales goals, he said.
Uncertainty about the job market, the savings rate and even the status of the tax code has made employers reluctant to hire, he pointed out: “It’s hard to make a hiring decision without sustained consumer spending.”