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Fung Global Retail & Tech Report Busts US Retail Myths

America’s apparel market is debunking the department store demise.

Fung Global Retail & Technology’s recent report, “Deep Dive: Retail Revolution-US Apparel Shifts in 20 Charts,” breaks down the misconceptions about the U.S. retail scene, including Amazon’s domination and fast fashion growth. While off-price stores remain favorite shopping destinations, consumers are still pursuing brick-and-mortar outlets most for their wardrobe needs.

According to the report, Walmart was the top apparel retailer in fiscal 2016, generating $23.3 billion in clothing sales. Two off-price retailers, TJX Companies and Ross Stores also made the top 10 cut. Despite Costco, Gap, J.C. Penney, Kohl’s, Macy’s, Nordstrom and Target also earning high rankings, Amazon didn’t emerge as a top retailer, due to its portal status. The e-tailer, which reported roughly $5.5 billion in apparel sales last year, will likely gain momentum though—if Amazon grew its first-party sales by an estimated 20 percent annually, it could bring in approximately $9 billion of apparel sales by 2019.

European fast-fashion tycoons, including H&M and Inditex, also are believed to be shaking up the U.S. clothing market.

Although H&M remains the top global fast fashion invader and made $3.2 billion in revenue last year, it holds only 0.7% of the U.S. apparel market share. The report said H&M’s U.S. performance has decreased and some brokers also said the retailer’s comparable sales were down for most of 2016. H&M’s small market share could be attributed to its core consumer segment, since it is favored by younger shoppers. Further, other international retailers, including Primark, are expected to match up with just under $1 billion in U.S. apparel sales by 2020.

Despite myths concerning Amazon and international fast fashion giants, consumers are still preferring off-price retailers for stylish apparel. Roughly 50 percent of consumers shop at off-price retailers, with the same group also shopping at other big-box retailers, including Kohl’s and Macy’s. Between 2011 and 2016, the off-price apparel segment grew revenues by 39 percent. Off-price retailers generated $44 billion of sales in 2016, which was nearly a quarter of total U.S. apparel sales. TJX Companies remains the off-price retail leader, since it saw $19.9 billion in apparel sales last year.

For menswear and womenswear, brick-and-mortar retailers, including Kohl’s and Walmart, remain top apparel shopping destinations. Over a 90-day period, 27.9% of womenswear shoppers went to Kohl’s to buy clothes, while 23.9% of menswear shoppers frequented Walmart for their wardrobe needs. Although brick-and-mortar retailers topped the list, Amazon came close behind as the second most popular retailer for menswear and the sixth most popular retailer for womenswear.

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