Clothing Stores
Description
Companies in this industry operate establishments primarily engaged in retailing new clothing. Major companies include Gap, TJX Companies, and Victoria's Secret (all based in the US), along with Asos (the UK), H&M (Sweden), and Zara (Spain).
Revenue for the global apparel and footwear industry is forecast to reach $9 trillion by 2034, according to Polaris Market Research. Key growth drivers include sportswear sales and demand from emerging markets.
The US clothing store industry includes more than 100,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $190 billion.
COMPETITIVE LANDSCAPE
Personal income and fashion trends drive demand for clothing. The profitability of individual companies depends heavily on effective merchandising and marketing. Large companies can offer wide selections of clothing and have advantages in purchasing, distribution, and marketing. Small stores can compete by offering unique merchandise, targeting a specific demographic, providing superior customer service, or serving a local market. The US industry is concentrated: the 50 largest companies account for about 70% of industry revenue.
Competition for the clothing store industry includes department stores, discount and outlet stores, and internet and catalog retailers. The online and off-price apparel sales channels are growing rapidly -- especially among younger women who are major consumers of apparel -- primarily at the expense of specialty apparel and department stores. Walmart reclaimed top spot from Amazon, according to Forbes Magazine. Walmart had 2023 retail revenue of $635 billion, according to the data from the National Retail Federation (NRF) and the US Securities and Exchange Commission.
Because of the lower costs to manufacture apparel abroad, US clothing retailers purchase the vast majority of the apparel they sell from vendors outside the US. The largest suppliers to the US as of June 2024 include China, India, Vietnam, Pakistan, Cambodia, and Indonesia. On the other hand, Bangladesh, whose apparel is at a standstill at present due to ongoing protests across the country, saw shipment volumes decline, according to a report from Just-Style.com.
PRODUCTS, OPERATIONS & TECHNOLOGY
Major products include women's clothing (about 40%), men's clothing (about 20%), children’s wear (about 10%), footwear (about 10%), and accessories (about 10%). Other sources of revenue include accessories such as hats, caps, costume jewelry, gloves, handbags, ties, wigs, and belts. Some clothing stores also sell shoes and cosmetics.
The industry includes national and regional chains and independent retailers. Store sizes vary greatly. Boutique stores may be smaller than 2,000 square feet; a typical mall-based store is about 6,000; large off-price retailers are about 30,000. Major companies may have large flagship stores in well-known shopping areas. Most clothing stores are located in retail centers, such as shopping or strip malls, and benefit from customer traffic drawn by larger anchor retailers. Large companies may have outlet stores in more remote locations. Companies measure how effectively they use space by monitoring annual sales per square foot.
Most stores use bar-coded tags on clothing and point-of-sale (POS) registers to track sales. Companies that sell expensive apparel typically use security tags to deter theft. Inventory management programs help companies identify slow- and fast-moving items and can sometimes automatically replenish inventory when levels are low. Real-time access to inventory information is especially important when larger companies need to balance merchandise across multiple stores and warehouses. Many companies use electronic data interchange (EDI) to facilitate purchasing with vendors.
Clothing stores buy from independent manufacturers, although some chains, including L Brands, have a manufacturing arm to produce their own brands. Depending on the depth of merchandise selection, companies can deal with hundreds (some, even thousands) of vendors. Large companies may use buying agents to manage vendor relationships. Some chains, such as Gap, may have significant private-label sales. To produce private-label merchandise, companies design their own clothes and outsource production. Because a large percentage of the apparel sold in the US is imported, the supply chain can be long and complicated. Reacting quickly to fashion trends is challenging, particularly for small retailers with limited influence over their supply chain.
Imports, primarily from China, are a critical source of supply for the US apparel market. Vietnam, Bangladesh, Indonesia, and India are also key sources of imported apparel. Transactions with foreign manufacturers are often in US dollars. The US has periodically imposed quotas on categories of apparel and textiles from China.
Working conditions of workers in foreign clothing factories have become controversial. Most apparel-importing countries pay low wages, and the "sweatshop" working environments in certain foreign clothing factories have resulted in negative publicity. Many retailers who buy from abroad certify that the factories they buy from adhere to certain standards, such as humane working conditions and a ban on child labor.
The two major clothes selling seasons are spring and fall. Retailers place orders with manufacturers well ahead of time, build inventory in anticipation of these seasons, and replenish inventory as product is sold. Chains usually receive merchandise at a central distribution facility and deliver goods to individual retail stores with their own fleet of trucks or outside carriers.
Clothing market segments include various styles (casual, contemporary, professional, formal); occasions (resort, special occasion, athletic); and price tiers that target a specific type of buyer. Major apparel brand names, such as Calvin Klein, Ralph Lauren, or DKNY, represent a certain lifestyle and appeal to a distinct customer. Designers often have multiple lines, each representing a particular style within a price tier to appeal to different customer types. Clothing stores select the designer line that best represents their target demographic. Companies must also buy the appropriate mix of sizes and colors to satisfy demand. More retailers are investing in plus-size fashions as the market for inclusive sizes grows faster than the US apparel market overall.
An effective store layout positions merchandise to maximize sales. Companies may have flexible floor plans that allow them to reposition products as needed. Clothing stores often display merchandise as coordinated outfits to help customers visualize combinations and drive complementary sales. Many clothing stores aim to deliver a distinct shopping experience or image, through unique decor, merchandise displays, a particular type of background music, or customer service.
Revenue for the global apparel and footwear industry is forecast to reach $9 trillion by 2034, according to Polaris Market Research. Key growth drivers include sportswear sales and demand from emerging markets.
The US clothing store industry includes more than 100,000 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $190 billion.
COMPETITIVE LANDSCAPE
Personal income and fashion trends drive demand for clothing. The profitability of individual companies depends heavily on effective merchandising and marketing. Large companies can offer wide selections of clothing and have advantages in purchasing, distribution, and marketing. Small stores can compete by offering unique merchandise, targeting a specific demographic, providing superior customer service, or serving a local market. The US industry is concentrated: the 50 largest companies account for about 70% of industry revenue.
Competition for the clothing store industry includes department stores, discount and outlet stores, and internet and catalog retailers. The online and off-price apparel sales channels are growing rapidly -- especially among younger women who are major consumers of apparel -- primarily at the expense of specialty apparel and department stores. Walmart reclaimed top spot from Amazon, according to Forbes Magazine. Walmart had 2023 retail revenue of $635 billion, according to the data from the National Retail Federation (NRF) and the US Securities and Exchange Commission.
Because of the lower costs to manufacture apparel abroad, US clothing retailers purchase the vast majority of the apparel they sell from vendors outside the US. The largest suppliers to the US as of June 2024 include China, India, Vietnam, Pakistan, Cambodia, and Indonesia. On the other hand, Bangladesh, whose apparel is at a standstill at present due to ongoing protests across the country, saw shipment volumes decline, according to a report from Just-Style.com.
PRODUCTS, OPERATIONS & TECHNOLOGY
Major products include women's clothing (about 40%), men's clothing (about 20%), children’s wear (about 10%), footwear (about 10%), and accessories (about 10%). Other sources of revenue include accessories such as hats, caps, costume jewelry, gloves, handbags, ties, wigs, and belts. Some clothing stores also sell shoes and cosmetics.
The industry includes national and regional chains and independent retailers. Store sizes vary greatly. Boutique stores may be smaller than 2,000 square feet; a typical mall-based store is about 6,000; large off-price retailers are about 30,000. Major companies may have large flagship stores in well-known shopping areas. Most clothing stores are located in retail centers, such as shopping or strip malls, and benefit from customer traffic drawn by larger anchor retailers. Large companies may have outlet stores in more remote locations. Companies measure how effectively they use space by monitoring annual sales per square foot.
Most stores use bar-coded tags on clothing and point-of-sale (POS) registers to track sales. Companies that sell expensive apparel typically use security tags to deter theft. Inventory management programs help companies identify slow- and fast-moving items and can sometimes automatically replenish inventory when levels are low. Real-time access to inventory information is especially important when larger companies need to balance merchandise across multiple stores and warehouses. Many companies use electronic data interchange (EDI) to facilitate purchasing with vendors.
Clothing stores buy from independent manufacturers, although some chains, including L Brands, have a manufacturing arm to produce their own brands. Depending on the depth of merchandise selection, companies can deal with hundreds (some, even thousands) of vendors. Large companies may use buying agents to manage vendor relationships. Some chains, such as Gap, may have significant private-label sales. To produce private-label merchandise, companies design their own clothes and outsource production. Because a large percentage of the apparel sold in the US is imported, the supply chain can be long and complicated. Reacting quickly to fashion trends is challenging, particularly for small retailers with limited influence over their supply chain.
Imports, primarily from China, are a critical source of supply for the US apparel market. Vietnam, Bangladesh, Indonesia, and India are also key sources of imported apparel. Transactions with foreign manufacturers are often in US dollars. The US has periodically imposed quotas on categories of apparel and textiles from China.
Working conditions of workers in foreign clothing factories have become controversial. Most apparel-importing countries pay low wages, and the "sweatshop" working environments in certain foreign clothing factories have resulted in negative publicity. Many retailers who buy from abroad certify that the factories they buy from adhere to certain standards, such as humane working conditions and a ban on child labor.
The two major clothes selling seasons are spring and fall. Retailers place orders with manufacturers well ahead of time, build inventory in anticipation of these seasons, and replenish inventory as product is sold. Chains usually receive merchandise at a central distribution facility and deliver goods to individual retail stores with their own fleet of trucks or outside carriers.
Clothing market segments include various styles (casual, contemporary, professional, formal); occasions (resort, special occasion, athletic); and price tiers that target a specific type of buyer. Major apparel brand names, such as Calvin Klein, Ralph Lauren, or DKNY, represent a certain lifestyle and appeal to a distinct customer. Designers often have multiple lines, each representing a particular style within a price tier to appeal to different customer types. Clothing stores select the designer line that best represents their target demographic. Companies must also buy the appropriate mix of sizes and colors to satisfy demand. More retailers are investing in plus-size fashions as the market for inclusive sizes grows faster than the US apparel market overall.
An effective store layout positions merchandise to maximize sales. Companies may have flexible floor plans that allow them to reposition products as needed. Clothing stores often display merchandise as coordinated outfits to help customers visualize combinations and drive complementary sales. Many clothing stores aim to deliver a distinct shopping experience or image, through unique decor, merchandise displays, a particular type of background music, or customer service.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
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