The roller-coaster economy that has evolved in the USA over the past few years served to reduce the growth in consumption of luxury goods, although anecdotally this was not the case for New York. The USA retains its leading consumption status but is likely to be outstripped soon by China. While the economy is by no means fully recovered, there are signs of demand growth in key markets like New York (potential luxury market size is 148 million consumers). The prevailing sense is that the American economy is poised to break out of its slow, post-recession recovery, rather than slipping back into recession. The U.S. is breaking away from the rest of the world partly because it has had more success working off the debt-driven excesses that helped precipitate the worst recession since the Great Depression.
- In 2011, the United States population was estimated to be at 311.6 million with expected year-on-year growth of 0.8% until 2013, then year-on-year growth of 0.7% into 2016.
- In the USA there is an increasing population in every age group except the 40–59 age bracket (86 million) which will experience a decline of –0.2% for the next five years. 20- 29-year-olds bracket (43 million) is expected to grow at a compound annual growth rate of 0.9% for the next five years. The USA population bracket of ages 30–39 olds (40 million) and 60 years old and older (59 million) are projected to increase at a faster rate than the overall USA population over the next three years.
- There are a number of demographic and economic conditions that support the view that the female and high-end consumer will remain strong. Women aged 30–39 and aged 60+ have the highest growth rate (1.3% and 2.8% forecasted growth rate over the next five years, respectively.)
- Women already control a majority of the household’s spending on apparel and accessories, but it is expected that women’s spending dominance will grow as employment trends make them more economically powerful.
- In 2011 the United States annual disposable income was estimated to be US$10.76 trillion with expected average year-on-year growth of 4.3% into 2016. Male disposable income (US$6.48 trillion) accounts for 59.9% while female (US$4.28 trillion) accounts for 40.1%. Females are expected to have a slightly higher average year-on-year growth rate (4.6%) through to 2016 compared to males (4.2%).
- The United States consumer expenditure was US$10.48 trillion in 2011, among which the expenditure on clothing came to US$305.71 billion, which accounted for 2.8% of the annual disposable income. The expenditure on clothing is expected to increase through to 2016, with an average 3.5% year-on-year growth, to US$363 billion in 2016.
- USA consumers often buy their apparel at clothing and footwear specialists, followed by mixed retailers, in particular, department stores, although their distribution share is declining. The economic downturn changed the shopping habits of many USA consumers, forcing them to shop at different stores and to alter their overall approach to shopping. Alternative shopping strategies that consumers have adopted included cutting back altogether on purchasing clothing and footwear, shopping more often at mass merchandisers and discounters, waiting for sales before buying clothing and footwear, and using coupons from newspapers or downloaded from online sites more frequently.
- The consumer’s path to purchase is no longer linear and therefore fashion retailers are quickly changing the way they operate in order to reach consumers through multiple channels. Retailers have responded by offering the options to hold online and then try and buy in store, try in store and then have the item sent to their homes, by offering real-time information on their desired item at the nearest store, loyalty programs and new avenues to purchase. Further, many consumers are attempting to stretch their apparel dollar by putting more effort into comparison shopping, both at multiple brick and mortar stores and through internet retailers. In 2011, USA apparel sales through internet retailing had a 7% share of the total clothing market at US$22.5 billion. With 100 million internet subscribers and 122 million households in the USA, access to the internet is ubiquitous.
- While consumers have been able to purchase fashion online for years, they have only more recently become comfortable enough to significantly increase their smartphone shopping. In the USA, 47%, or 234 million shoppers, own a smartphone, and the number of tablet users will reach 117 million by 2013.
- Key consumer values driving apparel purchase in the USA are fit, price, fabric, fashion/style, country of manufacture, store brand and designer brand.
Opportunity for wool
- Disposable income and consumer expenditure on clothing in the USA market is set for growth in the coming years. Increased confidence about the economy – and their own financial circumstances – led affluent consumers to boost their purchases of apparel in the third quarter of 2012, reversing a sharp downward trend earlier in the year. A study by Accenture also showed a growing appetite for luxury goods among the general population. Exactly half of the respondents indicated they were likely to make a luxury purchase in the next six months, including 48% of the sample that intended to buy luxury apparel.
- The fashion retailers that will thrive in this environment will be those that can adopt a strategy to address the luxury segment or offer another range of products, priced to attract the aspirational masses. This represents a unique opportunity for the wool industry as consumers gravitate towards value-oriented luxury apparel and aspirational brands.