NPD Reports On Apparel Sales By Retail Channel

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Consumers Shopping For Value Propel Growth Trends

“Why did these channels achieve this kind of growth and factory outlets even beat out the online channel for sales growth? …One word, value,” said Marshal Cohen, chief industry analyst, The NPD Group, Inc

The NPD Group, Inc., a leading market research company, reports on where consumers shop for apparel and looks at what retail channels are benefiting from the new ‘value-centric’ consumer mindset.

See Chart: Apparel Sales By Retail Channel Of Distribution

Sales of apparel in total are up 1.4 percent as of the 12 months ending in April 2011, and while there are signs of growth in a lot of channels, double-digit growth is seen in the factory outlet and warehouse club channels.

“Why did these channels achieve this kind of growth and factory outlets even beat out the online channel for sales growth? …One word, value,” said Marshal Cohen, chief industry analyst, The NPD Group, Inc. “Consumers are looking for brands they either already have, or that they trust. They want products that are tried and trusted and they don’t mind spending money on them.”

Another channel posting double-digit increases is the online channel. For the 12 months ending in April 2011, online sales grew by 12 percent. This is largely fueled by a 15 percent increase in female buyers.

Cohen notes, “As online settles into more consistent shopping patterns by consumers and slower growth rates, traditional retailers can use online as an opportunity to turn ‘viewers’ into ‘store shoppers.’ This is a huge opportunity to get consumers in store to shop again and put the impulse purchase back into their stores.”

The specialty stores channel posted the next largest growth rate among the remaining channels. It grew by 5 percent during this time period with the biggest contribution coming from sports specialty stores (+11.2 percent).

“This is yet another sign of retailers gaining momentum as consumers look for more discretionary product and product that has more versatile usage,” noted Cohen. “Sports apparel is an example of just that, and as a result is doing very well. Consumers are attracted to the additional functionality as well as its multiple uses. The sports apparel retailers that have promoted these features are the ones that are contributing the most to the growth in this channel.”

Additionally, there is an encouraging sign in the growth posted within the
department store channel. Sales in U.S. department stores grew by 2.5 percent in the 12 months ending April 2011, compared to the same 12 months ending in April 2010, during which time they posted a decline of 7.8 percent.

“This is a complete reversal of fortune,” said Cohen. “I think that department stores are beginning to actually get the timing of merchandise more in line with what consumers want and when they want it.”

The mass merchant channel is the only channel posting a decline for this time period. Sales in that channel are down 7.5 percent.

“Consumers are shopping less and less in this channel, and it’s a big loss of momentum they gained during the heat of the recession,” said Cohen, “Even by promoting value, which in their words is ‘shop here we have the lowest price,’ consumers have migrated away from this ‘lowest price’ to ‘better value.’ However, not all retailers in this channel are struggling, those are the ones that can directly relate to the consumer’s desire to buy the name brands they feel ultimately give them more bang for their buck.”

“I think it is important that as we approach the back-to-school retail season we should look for the ‘value centric’ consumer mindset to continue. As parents begin shopping for their kids, the retailers that can best capitalize on this new value-centric mindset will likely be the most successful,” said Cohen, “ The back-to-school season should be a late bloomer again this year, and it still represents a great opportunity for retailers to get a good jump on the next season and ramp up to holiday.”

About The NPD Group, Inc.
The NPD Group is the leading provider of reliable and comprehensive consumer and retail information for a wide range of industries. Today, more than 1,800 manufacturers, retailers, and service companies rely on NPD to help them drive critical business decisions at the global, national, and local market levels. NPD helps our clients to identify new business opportunities and guide product development, marketing, sales, merchandising, and other functions. Information is available for the following industry sectors: automotive, beauty, commercial technology, consumer technology, entertainment, fashion, food and beverage, foodservice, home, office supplies, software, sports, toys, and wireless. For more information, visit http://www.npd.com/, or follow us Twitter at twitter.com/marshalcohen and twitter.com/npdfashion. Become a fan of Marshal Cohen at http://www.facebook.com/npdmarshalcohen and watch more on NPD’s YouTube channel.

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Beth Boyle
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