Over 1,875 fashion retailers closed down only in last year. That does not mean the fashion retail industry is facing some crisis. If anything, the demand side in the industry has increased multifold. So, what caused these retail businesses to shut down?
According to the market experts, globalization, digital proliferation, and changed consumer spending patterns have thrust the fashion industry into a seismic shift. However, that does not mean the future of fashion retail businesses is murky. One needs to innovate more and adapt to the transitions.
For this purpose, a business needs to do a little market research and gather facts of what it is entering into. Here are a few statistics to help the businesses decide their strategy:
1. Online Industry
The world is shifting to digital, and the businesses need to do the same as well. Only last year, the global online fashion market valued at $533 billion. It is projected to hit the $872 billion mark by 2023.
As per the 2018 statistics, apparel had 65 percent share of the market, footwear 25 percent, and bags and accessories owned 10 percent of the market share. (Statista)
2. Revenue Projections
The Fashion and Apparel Industry Report has painted a promising picture for the future of the fashion industry. The report projects that the global revenue would increase to $712.9 billion by 2022 from $481.2 billion in 2018. (Shopify)
The driving factors for this growth will be the expansion of global markets to regions other than West, increased online access and smartphone penetration, globally emerging middle-classes having disposable income, and advancement in technology leading to experiential ecommerce.
3. Consumer Growth
As mentioned above, middle-classesacross the globe will have increased purchasing power. It means that the fashion consumers will also be willing to buy more. As per the statistics, the number of potential consumers will cross 1.2 billion by 2020 with majority falling within 16 to 24 and 25 to 34 age groups. (Statista)
However, some challenges will also arise in the meantime. These include the diminished brand loyalty because of market fragmentation, 50 percent high cost of combating online return rates, and pressure from consumers to use eco-friendly and ethically sourced materials.
4. Online Sales by Device
Mobile has taken over around 65.4 percent of the traffic of online fashion retailers. Moreover, the fashion sites have proven to be quite effective in turning the mobile traffic into sales. Amazon, though not a fashion website per se, has been the most popular site for online purchases of clothing. (Internet Retailer)
5. Exports of Fashion-related Products
The total exports of clothing stand at $1.29 trillion. China is the largest exporter of apparel across the globe, with 36.5 percent share in the market. The exports of textile and clothing amounted $22.9 billion as per the last count.
While the US is not one of the largest exporter of apparel, it still keeps a significant share of several textiles in the fashion industry. Its largest export product belonging to the fashion industry is raw cotton with worth $4.41 billion. (FashionUnited)
6. Exports of Footwear and Headwear
The exports of footwear and headwear have been recorded at $1.14 billion. The exports of footwear with leather body comprise 27 percent of the total exports. The parts of footwear took 23 percent share, other headgear 12 percent, and footwear with textile body 7.5 percent. (FashionUnited)
7. Imports of Fashion-Related Products
The US is the largest importer of fashion-related products across the globe. It major import comprises manufactured apparel. The overall imports of textiles and clothing stand at $105 billion. Whereas, the imports of footwear and headwear were marked as $28.8 billion. (FashionUnited)
8. Online Apparel Sales
The online apparel sales comprised 27 percent of the industry sales in 2017, 23 percent higher than in 2016 (Internet Retailer Online Apparel Report). The figures clearly suggest that the share of online market is increasing with every passing year.
9. Total Retailers
The total apparel retailers amounted to 266 on 2018 (Top 1000 list for Internet merchants). This number is greater than any other category in the year. It does not even include Amazon and Walmart, which are top sellers of apparel though not considered under the apparel retailers.
10. Compound Annual Growth Rate (CAGR)
The clothing industry’s growth rate is steadily increasing globally. However, the global revenue growth has slowed down. The compound annual growth rate (CAGR) has slowed down, predicted to decline from 15.3 percent in 2018 to 7.6 percent by 2022. The main reason for the slowdown is market saturation.
In the period of 2017-22, the CAGR in the US will settle in at 8.8 percent in the US, 8.7 percent in Europe, and 14.1 percent in China. (Statista)
11. Shoes Segment:Growth Rate
Shoes are a prominent segment of ecommerce fashion. However, this segment has been showing a persistent pattern of declining revenue expansion for a few years. It is expected to grow by just 6.6 percent in 2022 from a double digits growth rate of 13.6 percent in 2017-19 (Statista).
12. Jewelry Items: Growth Rate
The jewelry market worldwide is undergoing a 5-6 percent annual growth rate. Major threats faced by the industry are rooted in the wholesalers selling directly to the consumers and the consumer pressure on the manufacturers to be transparent about the prices. The ecommerce industry has around 5 to 6 percent share of the jewelry sales. The rate is projected to reach 10-15 percent by 2020. (Shopify)
13. Luxury Items: Growth Rate
China is the top purchaser of hobby and luxury items while the US is the second one with spending worth $2.7 billion. The luxury goods sales are witnessing a slowed growth annually at 3.4 percent. however, the increasing purchasing power in Asia-Pacific and in the Middle East is giving a push to the revenue per luxury good consumer, making it $313 by 2020.
14. Accessories and Bags Segment
The bags and accessories segment has witnessed a stronger growth rate. Its growth rate was marked as 15.6 percent in 2018. However, this rate is projected to plunge to a single digit at 8.7 percent by 2022. (Statista) Despite the decreasing growth rate, this segment will be the healthiest segment of ecommerce fashion.
15. Online, Offline Purchases Frequency
14.9 percent of the US consumers have said that they never buy clothing online while 6.4 percent said they do not buy in stores (Internet Retailers Survey).
16. Conversion Rates
The global conversion rate of fashion ecommerce sites is 1.3 percent on mobile and 2.4 percent on desktop. As evident from the statistics, the conversion rates at desktop are higher than the mobile. However, the ecommerce sites at mobile are quite effective in turning the site visitors into paying customers. The highest desktop conversion rates are in the UK, Germany, Austria, and Switzerland, i.e., at 2.9 percent. (Nosto)
17. Consumer Trend
20 percent of the consumers at the online apparel industry say that they make a purchase at least once every week. Whereas, 5.4 percent say that make a purchase at least once every month (Internet Retailer Survey).
18. Impact of Reviews
66 percent of the consumers say that an item having a number of positive reviews is an important factor when decision to buy clothing online. 53 percent say that whether the item has the lowest price or not is an essential factor. Whereas, 51 percent make a decision about a purchase on whether the manufacturer offers ample information to answer their questions (eMarketer).
19. Abandonment Rate
69 percent of the shopping carts are left stranded every quarter in the online apparel industry. While the abandonment rate is high, it is still lower than rate all other sectors experience, i.e., 69 percent (Sale Cycle).
20. Causes of Abandonment
40 percent of the consumers have cited website functionality issues for abandoning their clothing shopping cart online. 36 percent say the retailer would deliver the product late than required. Another 35 percent say that they abandon their online clothing purchase because of concerns about quality (Rakuten).
21. Personalized Recommendations
Personalized recommendation or promotions are a driving factor in ecommerce in general. These recommendations influence 43 percent of purchases. 75 percent of consumers opt for brands having personalized messaging, experiences, and offers. 94 percent of companies consider personalization vital for their current and future success. (Nosto)
22. Social Media
Social media has been a decisive factor in every market. Its influence becomes even greater in the fashion industry. The average interactions per post per 1000 followers remained 13.71 on Instagram, 1.12 on LinkedIn, 0.4 on Pinterest, 0.43 on Facebook, and 0.17 on Twitter (TrackMaven).
The consumers spent more than $59 billion on the fashion accessories in 2015 through electronic shopping and mail order (Statista)
24. Market Share
Amazon is projected to take over 14 percent share of the fashion market in the US by 2020 (Statista).
25. Incorporation of Technology
Online fashion industry has seen the entry of virtual reality, augmented reality, wearable tech, and connected fitting rooms. Smart fitting technologies have enabled the consumers to get the right size by just measuring the clothes in their wardrobes or by the comparison of specific brands and styles.
Within a first month of implementing Fits Me’ Fit Origin, Rhone Apparel increased the conversion rate from 3.7 percent to 9.8 percent. Analytics show that Fit Origin has brought about a whopping 20.4 percent plus incremental revenue to the business’s website (Shopify).