More time at home? Fashion consumption could decline by 50 bps in five years
When consumers work from home, they reallocate spend similarly to consumers in retirement, and apparel is the category that experiences the deepest decline.
“When consumers work from home, they reallocate spend similarly to consumers in retirement.” This is how Morgan Stanley anticipates that consumer spending will behave in the coming years, as the lockdown imposed by Covid-19 is left behind and homeworking becomes a permanent thing. While food and home supplies will benefit from that change, fashion will be a clear loser. Morgan Stanley predicts a 50 bps drop in the share apparel has in household expenditure in the next five years.
According to the investment bank, if work from home remains elevated for a longer time, apparel spend could decelerate further as consumers apportion spend to other categories. Together with apparel, the other two categories that will experience the greatest declines are food-away-from-home and transportation.
Fashion spending drops 10% when workers retire in the US
Fashion is, in fact, the category that loses the largest share of consumer spending when they retire. According to Morgan Stanley data from the United States Bureau of Labor Statistics, when workers retire they reduce their spending on clothing by 21%, while transportation falls by 4%, alcohol falls by 5% and food away from home, by 8%, while, spending on health, housing supplies and food at home jump.
Looking ahead, “in a scenario where work from home remains elevated (even if below current levels), apparel spend could decelerate further as consumers apportion spend to other categories,” says Morgan. All in, apparel spend could fall to around 2.7% of total spending in five years, versus 3.2% in the last five years. While spending on clothing will fall, the share of accommodation will rise to 20.6%, transport will drop to 15.41% and health will rise to 9.9%.
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