Hong Kong - The fashion industry is changing quickly with the rise of online shopping and e-commerce. Those who most directly experience the consequences are clothing retail stores. More than 9,000 stores closed in 2018 in the US alone and the numbers don’t look better for 2019. These numbers are higher than ever, even in comparison with the financial crisis in 2008 or the recession in the early 2000s.
Clothing retail stores are particularly affected by the current retail apocalypse. About one fourth of closed stores include struggling fashion brands ones such as GAP or Forever 21, but also Abercrombie & Fitch, Ralph Lauren, Victoria’s Secret and many more are closing stores. This is all in contrast to the revenue of the US apparel market expected to increase from 328 billion dollars in 2017 to 390 billion dollars in 2025, according to Statista. Intrepid Sourcing broke done the drivers behind this development and analyzed how fashion businesses should adjust.
Further Rise of Online Shopping
E-commerce sales growth for fashion products is largely cannibalizing retail sales. Overall consumer spending on clothing is only growing modestly at 2-3% per year, while online fashions sales are growing at about double the rate. American consumers are expected to spend about USD300 per person and year on clothing online by 2021 as determined by Statista. Clothing manufacturers and brands are reacting by having ever more offers online, selling more often directly to customers and by promoting their newest designs on platforms such as Instagram & Facebook.
However, the barriers to entry for selling clothing are much lower than for classic brick and mortar stores. Intrepid Sourcing hence predicts a further increase in the segmentation and market fragmentation of the clothing market. People shopping online have a much broader variety of brands to choose from then in a classic retail setting. Influencers and entrepreneurs leveraging their exposure to start clothing brands will increase. Better accessible small volume clothing manufacturing and sales platforms are amplifying this trend.
Trend Towards Customization
Creating clothing according to the taste of an ever-smaller niche is a logical response, since it is getting much harder to get any attention with a generic jeans or polo shirt online. The second major trend can hence be seen summarized under customization and personalization. Consumers are increasingly getting used to personalized recommendations and a large variety of options to choose from, which they know from Netflix, YouTube and other online platforms. This phenomenon will reach online clothing shipping as well.
From a clothing manufacturing perspective, this trend means that the average batch and order size in the clothing industry is likely to decrease. Faster lead times due to specialized clothing factories in Asian countries, better online communication and logistics processes make the production much more efficient than during the past decade. Brands will rather test the waters with even more designs hoping that one design will make it to a “trending” list that will increase sales tremendously. The demand spike for certain clothing designs going viral is already there, but it’s not a normal process. In the coming decade, fashion trends will be more like a YouTube hitlist with countless categories for people to discover.
How Fashion Businesses Should Adapt
Clothing businesses and brands should adapt both their sales channels and supply chain to thrive in the coming 2020s. On one hand, it will become tremendously important to be visible and present online over various platforms. What was once a shiny façade in a mall will become a well-maintained online presence. On the other hand, clothing designs have to become more individual. A standard t-shirt with a custom print is not exciting to anyone anymore. Creative cuts and materials are necessary to stand out.
This in turn makes agile supply chains and collaboration with small quantity clothing manufacturers necessary. The risk can be minimized if a design is tested by only producing a few dozen pieces. The resonance, particularly online, has to be tested. If a clothing design is getting the desired positive feedback, mass production has to be scaled quickly. If you’re interested in adjusting your clothing business to the new decade, check out Intrepid Sourcing’s All-in-One clothing production solution: https://intrepidsourcing.com/solutions/garments-production-package/