US Leads Dynamic Growth in Online Apparel and Footwear Sales

The US apparel and footwear market is seeing a major shift from in-store purchases to digital purchases. The apparel and footwear market saw retail value growth of 14 percent over the 2010–2015 period; online apparel and footwear sales recorded much faster growth, at 102 percent.

The growth of digital commerce is largely supported by the increase of digitally-savvy consumers. According to Euromonitor International’s Digital Consumer data, the number of internet users reached 76 percent of the US population in 2016, from less than 70 percent in 2011. As more consumers research, shop and buy products online, a number of key trends are emerging.

Store-based retailers are adapting to the digital age

With the growing number of digital consumers, apparel and footwear brands and retailers are investing largely in building their presence in internet retailing and improving websites to provide a seamless shopping experience for consumers. Department stores are especially ahead with their digital strategies. Leading department store chains, such as Macy’s and Nordstrom, have taken advantage of their retail presence and improved online services by offering same-day deliveries, “buy online/pick-up in store” capabilities and easy exchange/return policies for products sold through their website in select US locations. These features provide improved convenience to online shoppers, alleviating stresses associated with unpredictable delivery times.

Millennials are a key demographic for online apparel and footwear sales

Roughly 23 percent of the total US population are millennials and they are a key demographic for online apparel and footwear sales. Millennials are the first digital natives and tend to spend hours browsing fashion blogs and social media to learn about the latest fashion trends and styles. They see online retailing as easy and convenient as they are able to go directly to retailers’ websites to purchase products with styles they found on fashion blogs and/or social media. Millennials also enjoy shopping at online fashion retailers, such as Asos, Boohoo, Shopbop and Missguided, as they offer affordable but fashionable clothes that align with current trends.

Mobile commerce a must for apparel and footwear retailers

Consumers are increasingly connecting to the internet through their mobile phones. According to Euromonitor International’s Digital Consumer research, 97percent of mobile telephone subscriptions include internet access in 2016. With the increasing number of mobile phone users, apparel and footwear brands and retailers will continue to experience how mobile technology can improve customer experience through mobile apps, loyalty, communication and promotion. Moving forward, apparel and footwear brands will need to accommodate consumers’ on-the-go lifestyles, making mobile commerce a must-have channel for apparel and footwear retailers now and in the future.

Is social commerce the next growing channel?

Digital marketing is becoming an important retailing tool, as consumers are using social media as a platform for not only browsing and looking at reviews, but shopping as well. According to Euromonitor International’s Hyperconnected Survey, only 11 percent of respondents in the US said they have purchased items via social media. The number of social commerce users is expected to grow quickly over the next couple years. This is because social media players, such as Facebook, Instagram, Twitter and Pinterest, are introducing purchasing tools. Instagram, for example, started the shoppable tags on photos from apparel and footwear brands, including Abercrombie & Fitch, J.Crew and Levi’s. Social media platforms collaborating with leading apparel and footwear retailers to introduce new features will bring more interest from social media users and encourage them to use these unique purchasing tools.

In-store shopping experience is key

In order to attract digitally-savvy consumers, many retailers are incorporating digital technologies in their physical retail locations to facilitate and improve the shopping experience. For example, Uniqlo has added magic mirror to its store in San Francisco, which allow customers to view clothing in different colours by standing in front of the mirror without having to try on different items. Nike Soho in New York City, opened in November 2016, uses Nike+ apps to allow customers to schedule one-to-one retail appointments through their mobile phones. As digital and physical have started to merge, more retailers are testing new technologies to further improve in-store retail experiences.

Pure online retailers look for further growth in offline space

While store-based retailers are active in entering the online space, companies that began life online are now adding brick-and-mortar stores. After building a strong presence in digital platforms, online retailers are showing interest in expanding their retail presence to acquire new customers and further build brand awareness. For example, online retailers like Bonobos, Fabletics, and J.Hillburn have now all opened physical stores/showrooms. When consumers make a decision to purchase clothing, accessories and footwear, fitting, sizing and quality are key criteria. Pure online retailers are able to accommodate such needs and preferences by opening physical stores and allowing consumers to browse and try-on their products.

Over the next five years, US online apparel and footwear sales are expected to grow further, as consumers are increasingly becoming dependent on their digital devices and mobile phones to browse and make purchases. Store-based apparel and footwear retailers will need to promptly adapt to digital retailing and marketing to attract this growing digital audience. These retailers will continue to test new technological features, including mobile payment systems and smart fitting rooms, and offer a seamless experience through multiple channels that reach out to consumers.

By Ayako Homma, Senior Research Analyst at Euromonitor International

Images: J Crew Facebook, Asos Corporate, Wikimedia Ben Schumin