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NPD: Apparel Category Drivers See Slowed Growth and Declining Sales

Though millennials, athleisure and e-commerce have been the driving forces in apparel sales—and they still are—growth is slowing and so are sales.

In an NPD Group report released Wednesday, the market research firm said slowed momentum among the industry’s key sales drivers coupled with declines in other sectors, resulted in $215 billion in apparel sales last year, a 2 percent slide from 2016.

“The apparel industry is being challenged to respond to the latest changes being driven by the broader consumer and retail environment,” NPD Group Marshal Cohen, chief industry advisor, The NPD Group, Inc. “The rapid pace of change in millennial consumption is one major change that points back to the importance of evolving consumer segmentation. The future of the apparel business depends on manufacturers and retailers refocusing on the current needs of each critical consumer segment.”

Last year, millennials led apparel growth across all generations, with incremental sales increasing 4 percent to $2 billion. That’s down considerably from the double-digit growth rate the generation fueled over the past two years. Slower growth aside, however, millennials and Gen Xers were the only groups to see increases in apparel dollar sales in 2017. Baby boomers and Gen Z—which combined account for more than half of annual apparel dollar sales—both saw declines in overall spend last year.

Athleisure, though calming from its recent exponential rise, remains a primary growth driver in the apparel industry. While non-activewear sales fell, activewear apparel sales increased 2 percent to $48 billion, or 22 percent of total industry sales. Looking more closely at the category, both men’s and women’s activewear saw sales increase in 2017, but women’s activewear led the growth, climbing 4 percent year over year to $21.9 billion.

It may seem that e-commerce has put a major dent in brick-and-mortar apparel sales, but the online category has progressed relatively slowly, according to NPD, moving from 16 percent of sales in 2014 to 21 percent in 2017. Last year, e-tail sales grew just 4 percent year over year after experiencing double-digit growth the two years before.

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“Categories like active apparel bottoms, undershirts, and swimwear–which indicate the consumer’s concentration on comfort, the staples, and niche products–are the few sources of consistent, long-term growth in today’s apparel market,” Cohen said. “Retail is changing, the consumer is changing, and every industry must understand where spending habits have moved, and adapt to the shifting market dynamics that are impacting their business.”