Potential Hidden Dangers Of Clothing Retailers For Z Generation And Millennial Generation

A new report released by Clothesource, a clothing consultancy, argues that apparel retailers should invest resources cautiously in young consumers and technology.

The report, called The Emperor s Clothes, quotes data from the National Bureau of statistics and the Census Bureau of the United States, which shows that retail sales are higher than ever before. Sales of physical stores are still growing, and most clothing purchases still take place in physical stores.

Above: the trend of US retail sales in 2007~2017 (blue: stores; Orange: Online)

The report highlighted the excellent performance of Irish clothing retailer Primark, fast fashion brand Zara, Spanish parent company Inditex, and American discount retailer TJX.

Inditex and TJX both raised sales and profit expectations after strong growth in the previous quarter.

The latest financial data released by Inditex and TJX show that:

Inditex 2018 net sales in the first half fiscal year were 12 billion euros, up 3% compared to the same period last year, compared with sales (including same stores and online), an increase of 4% over the same period last year.

In the second quarter of TJX fiscal year 2019, net sales of $9 billion 300 million, an increase of 12% over the same period, and same store sales increased by 6% over the same period

Should clothing retailers focus on millennials?

Nevertheless, Clothesource's CEO Mike Flannagan still lists potential pitfalls of clothing retailers in the report, including clothing retailers' excessive obsession with Z generation and Millennials.

Mike Flannagan pointed out in the press release: "when most clothing consumption is contributed by middle-aged people, the clothing store has been targeting the millennial generation. Some of them are bankrupt, some are in debt, and some are at risk.

Fashion retailers spend a lot of time on fashion, and their customers just want to fit their clothes.

The report shows:

In 2016, the clothing market in the United States accounted for less than 5% of the consumers under the age of 25.

Consumers aged 25~35 account for less than 20% of the market share.

Consumers aged 35~44 and consumers aged 45~54 account for nearly 25% of the total market share, which is about two times the market share of young consumers.

Above: according to age groups, the share of clothing market share in the United States

Should apparel retailers invest heavily in digitalization?

Mike Flannagan also questioned the effectiveness of apparel retailer's investment digitalization.

He said, "

The IT project experts hired by retailers will never work, but inevitably, the related costs are two times the expected ones.

The report also invoked the view of Credit Suisse (Credit Suisse) Simon Irwin.

Simon Irwin said that for apparel retailers, "no development of online business is an advantage", and stressed that the most successful apparel retailers share relatively small online shares.

For example, Inditex's online share is only 10%, TJX is only 1%, Primark is zero.

Clothesource's report emphasizes from many angles that we need to pay more attention to the strategy of leading apparel retailers instead of following the trend of leading the fashion industry.

These trends include: more and more retailers are struggling to figure out how to win millennial and Z generation consumers, while expanding the electricity supplier strategy.

In fact, a market research company has always believed that investing money solely in IT projects is short-sighted.

For example, a report of the American Retail Federation in April this year pointed out that it is not necessary to invest in technology for technology. It is suggested that retailers should supplement and supplement online businesses through cross channel integration and improvement of physical networks.

NPD recently released by us consulting firm

The latest trend report "The Future of Apparel" also pointed out that the physical store is an indispensable channel for online business, and through the reform and innovation, the entity store can expand more consumer contacts.

However, NRF's report also highlights strategies to attract Z generation consumers.

In recent years, focusing on the younger generation of consumers has become a topic of general concern to the industry.

But Clothesource's latest report can bring new ideas to clothing retailers.