The apparel segment, which includes luxury, secondhand, and off-price fashion, has weathered its fair share of storms over the past few years as the COVID-19 pandemic and inflation knocked retail visits off-course. With inflation cooling, how are consumers reacting? We dive into the foot traffic data to uncover insights into the overall state of the apparel industry.
Revenge Shopping
Examining the baseline change in monthly visits to apparel, luxury, off-price, and secondhand retailers since January 2019 provides an overview of the current state of fashion. Visits to all retailers dipped in March 2020 as lockdowns kept stores closed, but the recovery from the first days of the pandemic was swift. Shoppers, excited to engage in “revenge shopping,” flocked to many apparel categories, boosting store visits. Foot traffic to clothing remained above 2019 levels for much of 2021, peaking during the holiday season.
But 2022 brought a fresh round of challenges, with the Omicron wave in early 2022 keeping some would-be retail visitors away. And mid-2022 saw soaring consumer costs as the CPI jumped, and the wider apparel category began to see a slowdown. At the same time, categories like thrift stores and off-price – which became a prime target for consumers who were trading down – rallied. And luxury shoppers, more insulated from the impact of rising prices, also continued to visit their favorite premium shopping destinations.
Foot traffic data reflects the consumer shifts within the wider apparel category. May 2023 visits to off-price, luxury, and secondhand retailers were 37.9%, 25.3%, and 33.5% higher, respectively, than in January 2019. Meanwhile, apparel visits were 2.0% lower for the same period – although overall apparel visits have recently begun trending upwards. Whether this growth momentum continues will likely hinge on whether inflation continues to fall and how apparel chains choose to approach the upcoming back to school and holiday season.
Thrifty Success
One category in particular has displayed a seeming imperviousness to recent economic headwinds. Visits to the affordable thrift store category have jumped recently, likely driven by a growing interest in secondhand clothing, sustainable fashion, and the revival of early aughts trends alongside an inflation-driven orientation to value. Visits to secondhand stores outperformed both luxury and traditional apparel on a year-over-year (YoY) basis, suggesting that this low-cost fashion destination is resonating with shoppers.
Meanwhile, luxury retailers experienced a slowdown in foot traffic during the first half of 2023, though the segment still outperformed overall apparel chains. And more recently, the YoY visit gap to premium retailers shrunk significantly, with May 2023 foot traffic only 8.7% lower than in May 2022, up from March and April’s visit declines of 14.6% and 15.2%, respectively. With more consumers seeking out luxury items, the segment seems poised to continue recovering its foot traffic into the second half of the year.
On the flip side, traditional apparel has seen its visits drop, perhaps as middle-income shoppers seek out bargains at a thrift shop, trade down to an off-price retailer, or choose to save up for luxury purchases. With the back-to-school and holiday seasons rapidly approaching, clothing retailers who can tap into the growing preference for affordability and sustainability may see foot traffic tick upward once again.
Off-Price Takes The Lead
Diving into the relative quarterly visit shares of apparel and off-price apparel retailers between Q1 2019 and Q1 2023 highlights how much recent economic trends are favoring lower-cost clothing chains. In Q1 2019, traditional apparel retailers led the category, with 53.9% of visits compared to off-price’s 46.1%. These numbers remained relatively steady until Q4 2021 when inflation began to appear on economic radars. Since then, off-price has slowly but steadily eaten into traditional apparel’s visit share, and by Q1 2023, the numbers reversed from Q1 2019, with off-price capturing 53.8% of the visit share compared to traditional apparel’s 46.2%.
And though inflation is cooling, apparel retailers are bracing for yet more challenges in the coming months, with many consumers indicating that finding a bargain will remain a priority into the holiday season. Retailers that can offer low prices for consumers increasingly concerned about spending into the crucial back-to-school and holiday shopping periods may see a stronger performance than those who can’t.
Final Tally
The apparel space, like the fashion it sells, is constantly shifting. Location intelligence indicates that retailers who can adapt to evolving consumer demands can seize the opportunity to capture visit share and beat the competition in an ever-changing market.
For more data-driven retail insights, visit placer.ai/blog.
