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Consumers Spending Less on Apparel and Footwear

When it’s deliver-or-die, supply chains become the lifeblood of a company. To that end, the fashion industry has embraced technology to navigate today’s hyper-complicated supply chain, with myriad solutions shaping the first, middle and last mile. Call it Sourcing 2.0.

Consumer spending on apparel and footwear continued to decelerate in July, according to the most current data released by the Department of Commerce, rising by only 0.6% on a 12-month smoothed basis, its smallest monthly increase in more than four years.

The rise was much lower than the increase in total goods spending, which rose by 3.7%, and nondurables spending, which increased by 2.5%.

Apparel and footwear spending growth has slowed from a peak of 6 percent in March 2012 to where it is today–not even keeping pace with inflation.

PCE1

Footwear spending fared a bit better than apparel in July, rising 1.4% compared to 0.5% for garments only. Apparel spending’s increase was its smallest since March 2010. July was the third straight month of decelerating growth for footwear spending.

PCE2

Women’s apparel spending had the best performance in the month, increasing by 1.2%, ahead of both menswear, on which spending dropped slightly, and children’s, where spending declined by 1.3%.

PCE3

Apparel and footwear spending as a percent of total disposable income, which is sometimes referred to as its “share of wallet,” fell from over 4.3% in 1994 to bottom out at just over 2.7% in June 2009. Since then, it has risen slightly to its current level of around 2.8%. Despite spending $365 billion per year on the combined categories, Americans have been able to dedicate less of their budgets to clothing, due to declining prices and plentiful supply of product, and free up dollars for more inflationary categories like housing, energy and health care.

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