Apparel retailers must stop targeting “broke” millennials, says study
A new report published by Clothesource argues that retail sales in the US and UK are not falling, nor are they moving online. According to the study, sales are actually on the up, but apparel retailers should be wary of ploughing their resources into younger consumers and technology.
The report, entitled “The Emperor’s Clothes”, cites figures from the UK’s Office of National Statistics and the US Bureau of the Census which record higher retail sales than ever, further pointing out that sales in brick-and-mortar stores are still growing every year.
To counter news of plummeting profits at Britain’s John Lewis and reports that US-based Sears is teetering on the verge of bankruptcy, the study highlights success at Primark, as well as at Inditex and TJX, both of which increased their sales and earnings forecasts when they reported strong results in the last quarter.
Nonetheless, Clothesource CEO Mike Flanagan is keen to outline a list of potential pitfalls for apparel retailers, chief among them: the sector’s obsession with Gen Z and millennials.
“Clothes stores keep aiming at millennials – broke, indebted and in precarious jobs – when most clothes spending comes from the middle-aged,” said Flanagan in a release. “They’re selling fashion when their customers just want stylish clothes that fit properly.”
Indeed, the report points out that under 25s accounted for less than 5% of US apparel market share in 2016, while 25 to 35-year-olds accounted for under 20%. Consumers aged between 35 and 44, and between 45 and 54, on the other hand, both came in closer to the 25% mark, collectively accounting for around double the market share of their younger counterparts.
Flanagan also questioned the effectiveness of apparel retailers’ investments in digital expansion, claiming that “They’re hiring consultants for IT projects that’ll never work but inevitably cost twice what they expected – and accountants expert at everything but reliable audits.”
The report further cites Simon Irwin of Credit Suisse who claims that “not being online is an advantage” for retailers in the sector, going on to emphasize that among the most successful apparel retailers, online share is comparatively small, accounting for only 10% of sales at Inditex, 1% at TJX and zero at Primark.
In many ways, Clothesource’s report, which aims to take “a sharp eye to the policies of the leading clothes retailers […] and to conventional wisdom on automating retail,” seems to warn against falling in line with the trends currently dominating the industry, as an increasing number of retailers puzzle over how to win over millennial and Gen-Z consumers, while also doubling down on their e-commerce strategies.
Market studies have, nevertheless, long been highlighting the short-sightedness of simply throwing money at new IT projects. One such report, published by the US’ National Retail Federation (NRF) in April of this year, advised against investing in “technology for technology’s sake”, suggesting that retailers concentrate on complementing their online presence with cross-channel integration and noticeable improvements to their brick-and-mortar networks.
This same NRF study, however, revolved around strategies for attracting Gen-Z shoppers, a focus on younger consumers which has become somewhat endemic in the sector in recent years and which, in the light of Clothesource’s new report, should give apparel retailers plenty of food for thought.
Clothesource’s “The Emperor’s Clothes” report is available for purchase on the company’s website.
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