Dive Brief:
- Early back-to-school spending was down 3% year over year in states where class was already in session, according to credit card data from research firm Earnest Analytics.
- Intimate and swimwear, apparel subscription services and high-end department stores fared the worst in early fashion spending, dropping 15%, 14% and 13% year over year, the report stated. Fast fashion, off-price department stores and active and athleisure saw growth, however, with spending up 9%, 7% and 3% respectively.
- The report stated that discount apparel companies were “likely benefitting from consumer trade downs” and pointed out that the year over year spending shifts “suggests the consumer economy may be beginning to feel the pressure from a record high inflationary period.”
Dive Insight:
These declines come as many retailers cite cautious consumer behavior amid an uncertain macroeconomic environment.
The report, which covered the four weeks of early school classes ending August 16, also noted that brands including Shein, Marshall’s, Lululemon and Burlington grew the fastest for the period, with Shein’s sales increasing 41%. Earnest noted that Shein’s dramatic increase represented “a stark reversal from the decelerating growth” the company experienced throughout 2022.
H&M was an outlier in an otherwise robust fast fashion upturn, with the Swedish retailer seeing an 11% decline. Fashion reseller Poshmark and athletics giant Nike saw gains of 12% and 7%, respectively.
Department stores including Nordstrom Full Price, Nordstrom Off Price, Belk, Macy’s and Dillard’s all saw losses ranging from 2% to 18%, while Victoria’s Secret, Stitch Fix and The RealReal all saw the largest downturns, dropping 20%, 25%, and 29%, respectively.
To gather information for its reports, Earnest analyzes transaction data that includes anonymous sales records for individual credit and debit card accounts, plus age and income details to help provide what it calls “a holistic view of shopper behavior.”
“We can't comment on future trends, but it does seem like consumers are substituting higher priced items for lower priced ones and looking for value across the entire economy at the moment,” Michael Maloof, head of marketing at Earnest Analytics said in an email to Fashion Dive.
During its Aug. 22 earnings call, Macy’s warned of weak consumer spending through the crucial holiday season. Credit card delinquencies at the retailer increased $84 million in Q2 to $150 million. The retailer reported a loss of $22 million for the quarter.
A separate study of shopping center traffic in August by analytics firm Placer.ai shows a sharp drop off in visitations at malls but an increase in visit duration. The report analyzed data from 100 top-tier indoor malls, 100 open-air lifestyle centers not including outlet malls, and 100 outlet malls across the country, and noted that “a larger share of visitors to indoor malls also visited value-priced superstores, discount & dollar store chains, and off-price retailers in July-August 2023 when compared to July-August 2022.” The report stated that this increase in “cross-shopping to budget-friendly chains” paired with longer mall visits could mean that for back-to-school buying, parents are focused on low prices, and that they’re visiting malls for “the activities and experiential component.”
