Fashion retailers may not have themselves a merry little Christmas this year.
Experts project that direct-to-consumer fashion and apparel sales will be down 2.3 percent in the 2023 holiday season, as compared with 2022. That data comes from Commerce Signals, which analyzes real consumer spending pattern data from credit and debit purchases across the United States.
Nick Mangiapane, the chief marketing officer and head of partnerships for the consumer spending insights firm, told Sourcing Journal that 2.3 percent might be a bit deceiving — the reality could be worse.
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“In our overall forecast, we’re only seeing total retail up 2 percent. With fashion down 2.3 [percent] in our projections, that’s not hugely different [from] the overall forecast being up 2 percent,” he said. “But obviously, it’s still down, and that doesn’t even account for the fact that inflation is up 3 percent, so… you’re closer to minus 6 percent, in real economic terms.”
But contextualized with the current state of fashion and apparel sales, that drop could still be an improvement for retailers, Mangiapane said.
“Over the past three months, we’ve seen consumer card spending decline at fashion retailers by 7.7 percent across all channels. While a -2.3 percent holiday forecast certainly isn’t good for the category, it is an improvement versus recent trends,” he said.
That in mind, perhaps DTC fashion retailers should be focused on selling to consumers with over $100,000 in household income; Mangiapane shared that high earners’ spending has increased slightly in the past three months, even spending among those with less than $75,000 in household income has dropped off.
Industry agnostic consumer spending is expected to increase this holiday season by 6.4 percent, according to the data. Much of consumers’ spending this holiday season will be directed toward experiences, not material goods, which Mangiapane said could be part of the reason DTC sales are decreasing in fashion.
The National Retail Federation (NRF) recently released data that notes the average American consumer expects to spend $620 on gifts and $255 on seasonal items like cards, candy and food.
Despite recent Deloitte data that shows consumers’ preferences for in-store shopping this holiday season has returned to pre-pandemic levels, Mangiapane told Sourcing Journal that declining in-store purchases for fashion retailers accounts for most of the projected 2.3 percent decrease in sales.
He said Commerce Signals forecasts that online fashion retail sales will be “essentially flat” at a decline of 0.1 percent, while in-store sales will decline 4.6 percent.
The decline in in-store purchasing in fashion and apparel is inconsistent with other projected trends around brick-and-mortar options like department stores and mass merchants. Commerce Signals’ new data forecasts a 4.4 percent increase in department store sales and a 7.1 percent increase in mass merchant sales for the holidays—so companies like Macy’s, Target, Walmart and Kohl’s can keep on caroling.
And even though sales in physical stores have healthy projections, the number of stores the average consumer will visit this holiday season will decrease, per the Deloitte data. The average shopper is expected to visit about four stores, while in 2022 shoppers visited about six for their holiday shopping.
This month could be an important one for retailers. According to Deloitte’s data, nearly one-third of shoppers’ budgets will be spent in the last two weeks of November. Sixty-six percent of consumers expect to flock to Black Friday and Cyber Monday deals, up from 49 percent in 2022. Higher-income shoppers say they plan to participate in BFCM, what insiders call the two big November shopping days, at higher rates than their lower-income counterparts.
If retailers want a share in that pie, they’ll have to provide superior customer experiences—but that could prove a challenge amidst a tough labor market for retailers.
New data from Verint shows that even as 41 percent of retailers plan to prioritize improving in-store customer service and engagement, service upgrades may not hit in time for the holiday season. Fifty-three percent of retailers indicated that they expect to have difficulties effectively staffing their stores with seasonal workers.
