US fashion sales to skyrocket: 535.9 billion by 2023
The United States clothing and footwear business will reach 535.9 billion dollars by 2023 boosted by specialized retailers, according to JustStyle and GlobalData.
There is a still a long way to go for the fashion business. Despite global deceleration and political uncertainty there is still growth potential for the industry. JustStyle and GlobalData forecast multiple digit growth for the American apparel and footwear business in its latest USA: Clothing&Footwear report.
Boosted by specialist retailers, fashion sales in the United States are to grow at a compound annual growth rate (Cagr) of 2.7% according to the report. Arriving at 535.9 billion by 2023 which represents an increase of 66 billion dollars.
However, this year hasn’t been easy for American fashion retailers, despite the United States being one of the biggest markets of this sector in the world. Sales in stores specialized in clothing and accessories started the year with a 1.7% rise, to go even deeper another 1.7% the following month and then recovered with 2.6% in March and 0.5% in April.
The online channel will increase its penetration from 21% to 31% by 2023
The market closed in negative numbers again with a descent of 2.9% up to 2.2 billion dollars, according to US Census Bureau. The evolution of sales in fashion retail in United States contrast with the one registered by the retailing business in the country, that closed each month in rise with growths that overcome the ones scored by garment stores.
The report explains that department stores and specialists are losing their share to the online channel. This will be the channel with the highest growth between 2018 and 2023, which is forecast to grow 166.3 billion dollars by 2023 as well as increasing its penetration from 21% to 31% in the same period.
As for consumers trends, the report states that consumers are slowly shifting to lower-priced retailers. This could happen as a result of the recent tariff raises imposed to the United States by the Chinese government, that hits right at the prices of American fashion retailers.
Value and mass market retailers continue as leaders of the market
JustStyle and GlobalData also explained that one of the categories with the best performance will be footwear, that will overcome clothing in the period, getting better results. The report still considers value and mass market retailers the leaders of the market. Some of the companies that where analyzed in the report were the case studies of Walmart, Macy’s, Nordstrom, JC Penney and Old Navy, amongst others.
However, times are not easy for American retailers. In the middle of trade war with China, most of this companies have part of their supply chain in Asia, so the tariff raises affects them directly and may also affect prices of their products.
Some of the main companies in the sector have addressed by letter to the President of the United States asking him not to continue applying more tariffs on the importation of garments manufactured in China, as part of the trade war.
The letter was sent by the fashion industry’s lobby of the American Apparel & Footwear Association (Aafa) and includes companies like Ralph Lauren, Brandon Maxwell or Narciso Rodríguez, as well as groups as PVH, VF, Tapestry, Global Brands, Safilo, Gap, or Levi Strauss, among others.
The companies are calling on Trump to exclude fashion from the 25% increase in tariff rates on products from China, which would be applied to goods worth 50,000 million dollars.
“We are already a highly tariffed industry, with an average of 12.5% of tariffs on clothing, so adding 25% would surpass even the benefit that some companies have,” said Rick Helfenbein, president and CEO of Aafa.
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