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Smaller Markets Drive Apparel Sales Online and In-Store

As fashion sellers born online continue to set up shop offline, the retail industry is abuzz with the renewed belief that physical stores are still relevant.

Contemporary clothing e-tailer Nasty Gal opened its first brick-and-mortar store in Los Angeles last November, followed swiftly by another in Santa Monica, California, in March. Bonobos currently has 16 Guideshops (offline showrooms where customers can try on items, then place an online order in-store) across the United States, including New York, Boston, Dallas and San Francisco, while Rent the Runway just opened its fifth location in Chicago. Even Zappos has tested the waters with a 20,000-square-foot pop-up in downtown Las Vegas.

Each of these online behemoths has said that brick-and-mortar stores are an important piece of their omnichannel pie—but have they picked the right markets in which to put down roots? New York and Los Angeles may account for the biggest share of apparel sales in the U.S., but according to the latest numbers from market research firm NPD Group, smaller metro markets are driving both growth rate and dollar volume increases for the industry.

In Orlando, Florida, apparel sales grew 23 percent over the year ended February compared with the previous year, and Washington, D.C. saw 18 percent growth. Phoenix, Arizona, and Cleveland, Ohio, each experienced an increase of 16 percent, while Detroit, Michigan, racked up an 11 percent growth.

As Marshal Cohen, NPD’s chief industry analyst, said in a press release, “When New York and Los Angeles don’t even make it into the top 10 list of DMAs (designated market areas) driving apparel growth, we have a big opportunity gap in the market. We need to understand the cause in order for the apparel industry to regain traction moving forward.”

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Total in-store apparel sales declined 2 percent in the same period, while online apparel sales soared 19 percent to account for 17 percent of industry dollars. Again, the biggest growth came from smaller regions—but the report pointed out that in-store sales continue to dominate in those markets as shoppers still like to put hands on a product before they buy, especially when it comes to impulse purchases. NPD said online only generates impulsive purchases 22 percent of the time, compared with 32 percent of in-store sales.

“Impulse purchases are the big growth driver, so the strategy of driving traffic to websites needs to exist in tandem with efforts to drive traffic to the stores,” Cohen said. “Regardless of regional market size or method to purchase, the apparel industry needs to engage consumers with something new and different—something they can’t find everywhere.”