U.S. Apparel Sales in Context

The U.S. economy is massive and one could point to a number of statistics to back up that claim, including Total U.S. Retail Sales.

As illustrated in Figure 1 below, over the past 10 years, Total U.S. Retail sales have consistently been greater than $3.5 trillion each year and in 2013, Total U.S. Retail sales totaled an incredible $4.5 trillion. To give you a sense of how large that figure is, in 2013, Germany, the 4th largest country in the world as measured by GDP, had a GDP of ~$3.7 trillion. In other words, the market value of all final goods and services produced within Germany in 2013 was $3.7 trillion and if the amount that we spent on retail sales in 2013 in the U.S. was instead spent in Germany, we'd be able to buy like everything made in Germany in 2013. Oh yeah, we'd also have $600 billion to spare.

While these Totals move markets worldwide, are arguably decent indicators of our economy's health, and are a lot more complicated and complex than I give them credit for, as a Total, they aren't all that actionable for the majority of us, particularly those of us who aren't traders, economists, etc. But when you start to break the Totals apart and examine its components, things get a little more interesting. Take, for instance, U.S. Clothing and Clothing Store sales.


Figure 1:



Now, for those in the apparel industry, the U.S. Apparel market sometimes feels infinite. Boundless. But U.S. Clothing and Clothing Store sales, as illustrated in Figure 2, range from ~5.5%-6.6% of Total U.S. Retail Sales. Hardly infinite and/or boundless...yet, nothing to scoff at either. In fact, total Clothing and Clothing Store Sales are fairly sizable on an absolute basis. In 2013, Clothing and Clothing Store sales in the U.S. totaled $249 billion and because when numbers are really big or really small we often lose sense of scale (or at least I do), here are some data points that give us a better sense of what that means:

  •  Apple's Fiscal Year 2013 Sales: $170.9 billion
  •  Number of People in the U.S. (per the U.S. Census Bureau): 319 million
  •  Net Worth of The Three Richest Individuals In the World (Combined): $214.6 billion
  •  GDP of Israel (as reported by the UN): $241 billion

Figure 2 



Thus, though not infinite/boundless, U.S. Clothing and Clothing Store sales aren't paltry. They are very substantial, on an absolute basis.


Figure 3:


Upon even a quick glance at Figure 3, above, you may be left asking yourself, “what the f*ck happened in 2008 and 2009?” Hopefully you asked yourself that; perhaps that means that those two years weren't as traumatic for you as they were for many, many others. And, to answer the question, in 2008 and 2009, the U.S. economy took a bit of a beating. Real GDP fell in ~3% in 2008, the first decline since 1982 and the worst decline since 1934. GDP also fell in 2009, albeit only by 0.24%, and the consecutive drops in GDP experienced in 2008 and 2009 represented the first the consecutive drop since 1933 and 1934.

But other than that question, nothing really jumps out of the page. In four out of the past ten years, Clothing and Clothing Store sales growth has been stronger than Total Retail Sales growth yet in six of the past ten years, Total Retail Sales growth has been stronger. Not much to write home about with.

So, why did I include this graph?

Well, aside from giving myself another opportunity to work on my Excel formatting skills, I included it because there is one year that is particularly interesting, both in and of itself, and relative to years past. That year: 2013.

Before we get into why 2013 is important, let's take a closer look at what actually happened in 2013. As shown in Figure 3, Total Clothing and Clothing Store sales grew by 3%, as compared to Total Retail Sales, which grew by 4.2%.

And Figures 4 and 5, both of which reflect data gathered by the NPD Group (the U.S. Department of Commerce did not report data of this granularity), provide a clearer picture of what, in part, this growth can be attributed to.


Figure 4:



Figure 5:


As for other key elements of this growth:

  • Men's pants sales, which increased 12% in 2013
  • Men's socks sales, which grew by 14% in 2013
  • Women's outerwear, which grew by 12% in 2013

And notably, among men's apparel sales, the only decline was in sales of men's tops, which dropped by 2% in 2013.

So that's what happened in 2013.

Here's why we should care, according to many economists...

The 3% increase in Clothing and Clothing Store sales represents the lowest increase in the past 10 years, excluding 2008 and 2009, which are outliers and granted, Total Retail Sales didn't exactly grow at a remarkable rate in 2013, the reason that Clothing and Clothing Store sales growth stalled is that our future spenders are big savers, who have become used to bargain bin prices on apparel.

In 2013, under-25 shoppers, who typically account for about 12 percent of clothing purchases, according to Bureau of Labor Statistics data, and will soon represent an even greater share of our buying power, spent 20% less on clothing on clothing purchases. The 2013 decline is greater than the declines of 2010, 2011, and 2012, and the trends are not in line with the spending habits and patterns of previous generations, at this point in their lives. Who knew, but under-25 year olds are bigger savers than shoppers.

Furthermore, more and more clothing items are now imported to the point that imports now account for 98% of the U.S. clothing market. But as the percentage of imports has gone up, the prices of clothing have not to the same degree. In fact, according to the Bureau of Economic Analysis, in 2013, imported apparel prices rose by less than 1%, substantially less than inflation.

But under-25 year old shoppers really only know what has become “the new normal.” Said otherwise, under-25 year old shoppers haven't had to deal with substantial prices in clothing and even so, they shop less. But who knows if these trends will continue or what will happen. In the words of a man that I respect highly, Ben Silbermann, “the future is fundamentally unwritten.”


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