Fashion and Luxury Blog

It’s another indicator of the increased penetration of these cross-border e-commerce companies. Our US Consumer Survey Insights Databank shows a purchase rate of about 16% for Temu among e-commerce shoppers in the three months ended February 2024.

Readers can find our Amazon Apparel US Consumer Survey report here (check Figure 13 for the range of retailers shopped for clothing and footwear). They can also find more insights and data in two recent presentations on Temu and Shein:

• Retail Industry Analysis: What Can Retailers Learn from Shein and Temu?
• Industry Insights: Decoding Shein and Temu

And check out our Amazon Databank for an abundance of metrics on that retailer and marketplace.

Meanwhile, on the supply side, the expansion of the resale market provides more affordable options for younger shoppers, ultimately increasing the circulation of luxury goods and driving demand for authentication services. Brands and retailers can also utilize the resale market to recapture profit margins on secondary sales.

This means that while individual ownership periods may be shorter, the resale market extends the lifespan of luxury products significantly. By reselling items multiple times, each product enjoys a longer lifetime than it might have had if it were simply discarded or left unused in a closet.

In the retail space, we identify resale as a major beneficiary of the Fast Luxury trend, with adjacent opportunities occurring in areas such as authentication.. It is fascinating to dive into the technologies that support the whole process, especially authentication. Some of the technologies currently used to combat counterfeiting in the luxury market include RFID (radio-frequency identification), NFC (near-field communication), blockchain, machine learning algorithms and AI (artificial intelligence). Looking ahead, we see potential for DNA-based authentication, which involves encoding unique DNA markers into luxury products during the manufacturing process, and advanced biometrics, such as fingerprint scanning and facial recognition, to authenticate consumers and to prevent unauthorized access or counterfeit replication.

Read more about “Fast Luxury” here and look out for our in-depth Market Navigator report on global luxury goods retailing, publishing soon.

Market Scale and Opportunity

• We estimate that sales of department stores in China declined by 7.9% in 2022 for $126.5 billion in total sales. Chinese consumers’ continued shift toward e-commerce, increased competition from domestic and international retailers, and challenging macroeconomic factors contributed to the decline. In 2023 and beyond, we expect sales of department stores in China to grow at low-single-digit rates annually, resulting in a CAGR of 0.6% for 2022 through 2027 for the sector.

Coresight Research Analysis

• Cultural traditions and festivals, government policies to support the development and transformation of the retail sector, and consumers’ urbanization are positive factors that will drive department store sales in China in the coming years. However, department stores in the country also face various hurdles, such as lower consumer traffic, sluggish economic growth and a high youth unemployment rate.
• The department store sector in China is fragmented. Shanghai Bailian Group is the leading department store group in the sector, with a total revenue of $4.6 billion and department-store-specific revenue of $0.2 billion in 2022. Shanghai Bailian Group is followed by Chongqing Department Store and Easyhome New Retail Group. Of China’s top 20 department store groups, 15 experienced declining sales in 2022.
• Department stores in China are using various technologies to innovate and enhance their offline shopping experiences. As of March 2023, the top three offline technologies department stores currently use are self-service payment systems, member recognition systems and interactive screens, per a survey conducted by Fung Business Intelligence, a think tank, and the China Commerce Association for General Merchandise.

What We Think

We expect that China’s department stores will continue to grow their online sales in the coming years as consumers’ retained online shopping habits present opportunities to gain data-driven insights and increase their online reach and shopper engagement. However, Chinese department stores also face various challenges, namely competition, operational requirements, and the need to seamlessly integrate their offline and online channels. Moving forward, we believe that department stores that embrace digital transformations, leverage emerging technologies and meet evolving consumer demand will be best positioned for success.

Please feel free to check our full report: https://coresight.com/research/department-stores-in-china-consumer-shift-toward-e-commerce-squeezes-sales/

• Year-over-year spending growth in clothing and footwear increased slightly to 2.2% in June 2023, higher than May’s revised 1.9% growth but lower than April’s revised 2.6% growth. Year-over-year clothing and footwear spending growth has moderated in recent months, due to softened consumer demand. We expect consumers’ pent-up demand to fully fade in 2023 and inflation to taper down further. As we move into peak summer months ahead of the new school year, we expect clothing and footwear spending to grow by a low-single-digit percentage.
• Overall clothing spending saw a year-over-year increase of 2.5% in June 2023, higher than the revised 2.1% growth seen in May and slightly lower than the 2.6% seen in April. Women’s and girls’ clothing outperformed in June 2023, with year-over-year growth of 2.9%. Women’s fashion retail tends to be more dynamic and fast-changing than men’s fashion. The launch of seasonal collections (from a supplier perspective) and consumer demand for summer vacation wear may have partly driven higher spending on women’s clothing in June 2023. Men’s and boys’ clothing spending outperformed from January to May 2023. Meanwhile, spending on footwear grew 0.8% in June 2023 versus revised growth of 0.9% in May and 2.3% in April.
• Consumer spending on beauty increased by 5.7% year over year in June 2023, versus 5.6% growth in May and 6.7% growth in April. Although spending growth slowed, it remained strong compared to pre-pandemic levels (low- to mid-single-digit growth), reflecting that beauty remains a low-cost, feel-good category that can withstand economic slowdowns.

Feel free to check our full report here: https://coresight.com/research/us-apparel-and-beauty-spending-tracker-june-2023-clothing-footwear-and-beauty-spending-growth-up/

• Year-over-year clothing and footwear consumer spending growth slowed to 1.7% in May 2023, down from April’s revised 2.6% growth and March’s revised 2.5% growth, mainly due to softened consumer demand. We expect consumers’ pent-up demand to fully fade away in 2023 and inflation to taper down further.
• As we move into peak summer months ahead of the new school year, we expect clothing and footwear spending to grow by a low-single-digit rate.
• Overall, spending on clothing saw a year-over-year increase of 2.0% in May 2023, lower than the revised 2.7% growth seen in both April and March. Men’s and boys’ clothing spending continued to outperform in May 2023, seeing year-over-year growth of 2.8%. Meanwhile, spending on footwear grew 0.5% in May 2023 versus revised growth of 2.3% in April and 1.6% in March.
• Consumer spending on beauty increased by 5.7% year over year in May 2023 versus 6.7% growth in April and 6.4% growth in March. Although spending growth slowed, it remained strong compared to pre-pandemic levels (low- to mid-single-digit growth), reflecting beauty’s position as a low-cost, feel-good category that can withstand economic slowdowns.

The Coresight Research US Apparel and Beauty Spending Tracker provides a monthly update on the trajectory of consumer spending on beauty, clothing and footwear. Our latest report covers spending from May 2023, showing that clothing and footwear spending increased by 1.7% year over year.

Data in this report include:

• Year-over-year changes in US consumer spending on clothing and footwear overall, and breakdowns by category, May 2022–May 2023
• Year-over-year changes in US consumer spending on selected beauty categories, May 2022–May 2023                      

Other relevant research:

• The previous US Apparel and Beauty Spending Tracker with April 2023 data
• The Coresight Research monthly reports collection
• Coresight Research coverage of the apparel and footwear market

Drivers of US Luxury Apparel and Footwear Market

Growth of the US luxury apparel and footwear market is being driven by the high number of affluent consumers in the US, pent-up demand for occasion apparel and footwear, growing interest in active lifestyles and outdoor activities and inflation. However, depleted personal savings and the reduced discretionary spending power of middle- and low-income shoppers due to inflation represent key headwinds.

Competitive Landscape and Key Themes to Watch

In the report, we also present US apparel and footwear revenue of selected luxury apparel and footwear brands and retailers. We discuss the four biggest players by revenue—LVMH, Kering, Capri Holdings and Tapestry—in detail.

There are also a few themes that we are watching. For example, luxury apparel and footwear brands opening stores in second-tier cities in the US is a growing trend in the industry, driven by changing consumer preferences and increased competition in major cities. Second-tier cities offer a more diverse customer base, lower operating costs and less competition from other luxury brands, making them attractive locations for expansion.

Luxury is also gaining share of the fashion resale market in 2023, driven by consumer demand for pre-owned luxury, the resilience of luxury shoppers in an inflationary environment and the emergence of more luxury resale platforms.

Metaverse continues to present huge opportunity for the luxury market. Luxury brands and retailers typically enter the metaverse through two key approaches: delivering virtual outfits in collaboration with third-party platforms or launching digital products on the brand’s or retailer’s own platform.

As workplaces evolve to be more remote and casual, we think luxury will continue to break away from its traditional norms and look to new audiences, designers and trends for inspiration, specifically streetwear and athleisure brands and designers.

Data in this research report include:

• US luxury apparel and footwear market size, year-over-year change and share of the total US apparel and footwear market, 2018–2027E
• Consumer price index for apparel and footwear
• Proprietary US consumer survey data—brands from which luxury shoppers made purchases in the past three months
• Apparel and footwear revenue of selected luxury brands and retailers

With this blog post, we also launch our new Fashion and Luxury Retail Hub, which aggregates the abundance of data, reports and company profiles that our analysts and data associates produce on softlines retail markets. Among the data in the Hub are proprietary global market sizes, monthly data on US apparel and footwear spending, quarterly US consumer survey data, weekly US store openings and closure data and our global reports and company profiles. While a number of the data points are US specific, we also feature data highlights from our international coverage, which includes Europe (especially the UK) and Asia (with a focus on China and India). International research can be found in our sector reports and company profiles.  

Please explore the new Hub and share your feedback!