Apparel & Accessories Retail Industry Trends

POS Computer Systems

Demographic Trends

Many retailers now use bar coded sales tags to enter information into central computers at cash registers. These point-of-sale (POS) systems allow retailers to track sales of specific items daily, identify popular and unpopular items, track inventory, and automatically order more product.

From 2000 to 2010, the population of the US will grow 10 percent. Those five to 19 won't grow at all, nor will those 20 to 44. The strongest growth will be in the large and affluent 45 to 64 age group, which will grow 30 percent. Clothing stores that target this older age group may have the best opportunities for growth.

Chain Expansion

Branded Chains Grow

Most retail markets remain highly fragmented, but large chains have expanded rapidly in recent years, especially in large metropolitan centers. Although some chains have expanded by buying competitors, another trend has been to open new "superstores" that follow a format successful in other markets.

The concept of branded chains is fairly new. Chains like Gap and The Limited carry only their own brands, a strategy that depends heavily on their continuing success in designing a range of appealing clothing. Traditional clothing stores carry an assortment of brands and can adjust their offerings if a brand falls out of favor with customers; however, branded chains have the advantage of completely controlling their marketing environment. Gap grew from 1,500 stores in 1995 to 3,000 in 2005.

Supplier Consolidation

Lower Clothing Prices

The growth of specialty chains has encouraged consolidation among suppliers and manufacturers in many markets because large chains want to buy large quantities and prefer to buy from fewer manufacturers. Fragmentation continues in markets like jewelry and clothing (The Limited buys from 4,700 suppliers); however, the toy market is different: Toy Co. buys a large portion of its products from just five manufacturers.

Prices for clothing have consistently fallen in the past decade, encouraging shoppers to buy more. Lower prices are the result of more clothing manufacture in foreign countries with low labor costs. The consumer price index for clothing fell 9 percent from 1995 to 2005.

Credit Card Fraud

Department Store Competition Decreases

Credit card fraud is measured by the chargebacks on transactions in clearing a bogus charge. On the Internet, chargebacks are more than three times higher than all other credit card processing mediums combined, according to Visa. Retailers are responsible for chargebacks on credit card transactions where the credit card is not physically present, incurring high fees for chargebacks, return fees to customers, and returned merchandise.

Fewer shoppers buy at department stores: in the last five years, while clothing store sales increased 25 percent, sales at conventional department stores fell 7 percent. Consumers are now more likely to shop at malls that have the assortment of goods that used to be found in department stores.