Amid financial uncertainties, U.S. consumers are becoming more discerning in what nice-to-have retail products they are willing to indulge in, shifting their purchasing away from major retailers toward smaller brands, with clothing and accessories companies benefitting from this trend.
Per a recent Reuters report, data from credit card transactions reveals a trend where shoppers are willing to splurge on fashionable and trendy items while cutting back on big-ticket purchases, favoring specialty brands and retailers over incumbent industry giants.
The report noted that sales for popular brands such as Birkenstock, Abercrombie & Fitch and Vuori have risen, reflecting a shift toward clothing and footwear. Sales in clothing grew by 3.2% and footwear by 0.4%. Conversely, the demand for high-cost items, especially those related to home living, has significantly declined. Electronics sales fell by 1.9%, and homeware purchases dropped by 4.2% in the first quarter compared to the same period last year.
Indeed, when consumers treat themselves to new retail products, their wardrobes are the first place they look. The “Nonessential Spending Deep Dive Edition” of the PYMNTS Intelligence series “New Reality Check: The Paycheck-to-Paycheck Report,” found that that 70% of retail shoppers at least occasionally buy “nice-to-have” items, with clothing being the most common choice.
Among those who purchased nonessential, non-grocery retail items, the survey of over 3,400 U.S. consumers revealed, 36% said their most recent purchase was clothing, making this the most popular category. The second most popular category was health and beauty, chosen by 19% of respondents.
As consumers buy new apparel and accessories, they are turning to more specialized brands. Reuters’ report cited Michael Gunther, head of insights at Consumer Edge, commenting that “newer, more niche companies” in fashion are performing more strongly than “more established players.”
Earlier this year, for instance, Bloomberg reported that Kim Kardashian’s Skims brand, founded just five years ago, saw net sales reach almost $1 billion last year. Shein, founded less than two decades ago, reported more than $32 billion in sales last year, per The Verge, up nearly 50% from its $23 billion the year prior, according to The Wall Street Journal.
Young shoppers, especially, are saving up to splurge on retail products, as reveals the PYMNTS Intelligence study, “New Reality Check: The Paycheck-to-Paycheck Report – Why 60 Percent of Gen Z’s Live Paycheck to Paycheck.” The study, which drew from a survey of more than 3,500 United States consumers, found that Generation Z is the only age group to be more likely to cite buying an expensive retail product as their top financial goal than to cite paying for an upcoming event or show.
Notably, however, day-to-day, consumers tend to be looking for ways to cut down on their clothing budgets. The PYMNTS Intelligence study last year “Consumer Inflation Sentiment: The False Appeal of Deal-Chasing Consumers” found that the 58% of consumers who had traded down to less expensive retail merchants were likeliest to make such sacrifices on their clothing purchases. Four in 10 shoppers had switched to more affordable clothing and accessories merchants.