How Stores Can Win Back Clothing Sales

Innovation is driving Lululemon's gains

Consumers are cutting back on clothing, and weak or declining sales are dogging everyone from Walmart and Target to Macy’s and Nordstrom.

Those declines aren’t inevitable, though. Lululemon just reported sales are up an impressive 14% in the latest quarter, and at Dick’s Sporting Goods, sales rose 5.3%.

Experts at Circana, recently formed by the merger of NPD Group and IRI, say there are concrete steps to make clothing seem as tempting as groceries to consumers.

“Faced with higher food and grocery bills, consumers have had to make concessions, and forgoing fashion-related purchases has been a big part of this tradeoff,” says Marshal Cohen, the market research company’s chief retail advisor. “For the fashion industry to reengage with the consumer, its value proposition needs to be clear. This value manifests itself in products and categories offering innovation and emotional connections which create demand.”

The company notes consumers continue to be more cautious and canny, causing U.S. general merchandise retail sales revenue to decline 7% in April, with unit sales slipping 8%. And food prices continue to rise, up 8% compared to April 2022.

As part of a recent “Future of Style” event, Circana outlined four ways fashion retailers can recapture consumer interest.

*Pay closer attention to replenishment cycles. Replacing worn-out clothes is a prime motivation, named by 57% of U.S. consumers in Circana’s research. With 80% of buying based on need, that factor has driven sales since 2019. People spent 2020 stocking up on cozy hoodies and sweatpants. Casual clothing drove gains in 2021. And by 2022, people were replacing dressier items, like suits and blazers.

That means many shoppers have replaced their entire wardrobes over the past three years, says Maria Rugolo, Circana’s apparel industry analyst, in the report. “Consumers today need to be enticed by something more. Winning brands will draw in consumers by offering broader lifestyle appeal and introducing a wider portfolio of fresh, unexpected options for wardrobe expansion.”

*Do something new. People are mostly bored by clothing, with 54% saying no clothing category is offering much in the way of innovation. The report notes a decline in the number of apparel and footwear items introduced in 2022 compared to the prior year.  Fresh product is key to keeping consumers interested.

*Honor their beauty cravings. While consumers are cutting back in many areas, beauty products are in a class by themselves. Among consumers who are cutting back on spending, 70% say they won’t pare down on their beauty budget. Prestige beauty continues to be one of the top-performing categories Circana tracks, with both dollar and unit sales increasing.

*Find ways to spread joy. Young consumers between 18 and 24 traditionally spend a great deal on fashion. Yet in the last 12 months, they’ve ratcheted purchases back 11%. What these shoppers are buying, Circana says, are things that make them feel good, including toys and beauty products.

“With immediate fashion needs met, purchase motivators will likely shift focus to two things: innovation and joy,” says Kristen Classi-Zummo, another Circana apparel industry analyst. “By its nature, fashion instills the values of confidence and self-expression, but there is a need to bring these traits front and center. In the face of economic instabilities, consumers consistently turn to products that uplift, instill confidence, and spark joy.”

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