NEW YORK — The price deflation that has afflicted the apparel business seemingly forever has actually afforded the fashion sector some insulation from the declining number of females in the workforce — and resulting drop in household income.
That’s the theory of Marshal Cohen, author of just-published “Why Customers Do What They Do” (McGraw Hill, $24.95), in describing the good news-bad news scenario emerging for apparel players from patterns in the U.S. economy.
“Apparel leads all industries in price deflation, with prices falling [a total of] 4 percent over the past 10 years,” Cohen, chief industry analyst at market researcher The NPD Group, said in an interview. “The only other industry that’s that way is consumer electronics. People tend to buy apparel with or without a lot of money in their pocket.”
With replacement needs the key purchase trigger, relatively less money in a household’s coffers tends to delay such apparel buys for only a short time — a few months.
“What does change is where they buy it and how much they spend,” Cohen said. And price deflation makes apparel purchasing easier in households with diminished funds.
This is good news for a fashion sector facing a declining female population in the U.S. workforce, which has lost 8.8 million women from 1999 through 2003, marking a 13 percent decrease in females ages 25 to 54 who were employed, according to Bureau of Labor Statistics data Cohen cites in his book.
“We see more and more women either working from home in a more entrepreneurial way or not working at all,” Cohen writes. “Some women are discovering that it is better financially and otherwise for the household to do without the second income and the extra expenses for child care, wardrobe and other career costs.”
In such households, Cohen said in the interview, women typically need only one wardrobe and are spending the remaining household budget on clothes for the entire family, so the women tend to spend less on things they would wear themselves.
From these dynamics emerged, in 2004, the first increase in spending on women’s apparel in four years, expenditures that reached $95 billion, up 2.2 percent from $93 billion in 2003. Women who didn’t have jobs accounted for $37 billion, or 39 percent of that spending, in 2004.
Related Articles
You May Also Like
Besides swings in women’s employment, the apparel sector, for one, has been hurt by a consumer who is increasingly frustrated in her efforts to find the products she wants — the impetus, Cohen said, for him to write his book. Part of the problem is that “manufacturers are on a quest to produce products based on a search for better profit margins, rather than satisfying customers,” he said.
In addition, women are becoming harder to satisfy as they become better informed.
In the realm of apparel, department stores have disappointed most shoppers, Cohen contended. Grabbing for new customers even as they downsize services, department stores have left many of their once loyal shoppers behind, resulting, the author writes, in a loss of “5 percent of their sales over the last eight years to mass merchants and specialty brands and retailers.”
Further, with the average cost of food rising 1 percentage point more than the average U.S. income — 3.5 percent versus 2.5 percent — department stores have been squeezed, particularly as luxury retailers have offered more affordable goods and mass retailers have been selling designer items at value prices.
Cohen said the road out — in fact, the path best pursued by most any marketer aiming at the apparel consumer — is to play to a person’s lifestyle, rather than life stage, as one’s lifestyle is a primary influence on the decision to buy a given item. That’s because people at different stages in their lives are more likely to be living in a similar manner than they were in the past. For example, he said, school-aged children are more likely to be involved in a range of after-school activities than they were 10 or 20 years ago, freeing up time for their parents to indulge in activities of their own.
As a result, he said marketers ought to focus on selling a brand rather than simply selling a product. The best way to do so, Cohen maintained, is through what he calls the five Es: educate consumers about the product; explore who the customer is; help people elevate their lifestyles; entertain, whether informing about a product or providing a shopping environment, and evaluate one’s progress with one’s customers.