Disruption in the US clothing industry
One impetus for concentration is declining sales. That's what is hitting the US clothing market, according to a recent Wall Street Journal article ("As Consumers Find Other Ways To Splurge, Apparel Hits a Snag", 2/4/05).
The causes for this decline are several, but the trend is unmistakable. According to the article,
Although the population is growing, sales of men's and women's apparel in the U.S. peaked in 2000 at $175.7 billion and declined the following three years, according to NPD Group, a market researcher. Last year, despite a surge in luxury-goods spending, and predictions of healthy sales growth overall, apparel sales grew 4%, a rate below retailers' expectations. Unit sales fell 1%, NPD says. Total dollar sales of apparel in the U.S. in 2004 were $172.8 billion -- or 1.7% less than they were in 2000.
The article speculates that people's urge to spend on style has extended to a host of other products (cars, cameras, massage therapy) and so there's less money available. Other factors may be the aging of the population and a decline in interest in style.
Whatever the reason, clothing stores have been closing at record levels. For example, Gap Inc. is closing almost one tenth of its 1,365 flagship stores, while Limited Brands (The Limited, Express, Victoria's Secret) is closing 1,800 stores.
Hardest hit are department stores. The article sees that one of the main reasons for the Sears-Kmart merger was this move, and current merger talks between traditional department store chains, May Department Stores (Kaufmann's, Filene's, Lord & Taylor, Marshall Fields, Robinson-May) and Federated Departments Stores (Macy's, Bloomingdale's). We are also starting to see some buyout in the clothing manufacturing industry.
The biggest motivator, according to the article, is the switch to casual clothing over the past decade.
Apparel's declining fortunes began with the move toward casual clothes in the early 1990s, discouraging men and women from buying the expensive suits, ties and jackets that defined previous generations. The long-term effect of the casual boom was masked by the explosion of casual brand names such as Gap, Tommy Hilfiger and Calvin Klein, which buoyed the industry for a decade but have since sputtered amid fierce competition.
