Consumers are tired of pinching pennies.
Although people plan to spend more on clothing in the months ahead, retailers that want to grab market share might want to focus their attention on shoppers ages 23 to 35, as well as households earning $200,000 and up.
“We’ve got the younger age group being more economically optimistic,” said Jonathan Sharp, managing director in Alvarez & Marsal’s Consumer Retail Group. And while they’re driving more discretionary spending than other demographic groups, “within that discretionary spend, apparel is the [one that’s] fastest rebounding—I’m not pretending it’s on the positive side of the ledger, but it’s the fastest rebounding category.”
Men in the 23-35 bracket plan to spend more over the next six months versus women their age, according to the Alvarez & Marsal’s Spring 2023 Consumer Sentiment Survey. Sharp says this group marks the “sweet spot” for retailers.
As for why younger men show an intent to spend more, Sharp said “a consistent theme for as long as I’ve been doing consumer sentiment surveys is that men are more optimistic than women.” He said that women are the ones who juggle the household budget, which is why they’re often the first to notice rising prices and “will actually be the first to worry most about how to make the juggling happen.”
Many younger consumers also quit renting during Covid and went back home to live with their parents. Adding to their savings were those who had good salaries and were able to work from their parents’ basement, he said.
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Sharp, the lead author of the Survey’s report, said consumers in general were pulling back six months ago and have some savings built up—money that they’re willing to start spending now that “inflation paranoia has faded.” Helping with household finances in the U.S., the survey’s focus, has been a dip in gas prices, he said.
As for spending plans over the next six months, apparel sales are still projected to fall 7 percent, but that represents a 13 percent improvement from Fall 2022. And footwear spend is estimated at down 10 percent, representing a 7 percent uptick from Fall 2022.
Sharp said that more consumers are updating their wardrobe now that many are working a hybrid, three-day in-office week. And spending intent appears to be evenly split between consumers opting for slightly informal apparel options and those leaning toward dressier choices.
Other key points from the study include 53 percent of respondents indicating that one barrier to spending in the next six months is that products are too expensive. Another factor cited by 24 percent centered on how the shopping experience is either not pleasant or service is poor. In addition, 65 percent said they expect prices to rise over the next six months. Also, 42 percent said they planned to spend less on apparel and footwear because they have to spend more on the basics.
Moreover, over two-thirds of respondents believe that the U.S. is already in a recession or will be in one within the next year, and 61 percent said they have taken action to prepare for an economic downturn. Consumers with annual household incomes of $100,000 or less tended to believe the U.S. is already in a recession.
In addition, 68 percent of those surveyed said they sometimes consider an item’s sustainability prior to purchase, up 5 percent from Fall 2022’s report. And 76 percent, or up 10 percent from Fall 2022’s survey, said they are “willing to pay at least slightly more” for a product that is environmentally friendly. Younger cohorts between ages 23 to 35 were most concerned about sustainability, while their older counterpart between ages 56 to 80 rarely or never consider sustainability before purchase.
As for channel preferences, 67 percent in the latest survey said they preferred in-store shopping, with 33 percent opting for online purchases. Sixty-two percent said they preferred to shop in-store for footwear purchases, down 1 percent from Fall 2022, while 59 percent said in-store apparel purchases was their preference, or down 2 percent from the prior survey.