A statistical snapshot of decline

Data paints a stark picture. As per Coresight Research, in 2023, US retailers announced over 5,000 store closures, with a significant portion belonging to apparel and footwear. While this number is down from the pandemic highs, the trend of closures continues. In the first half of 2024, numerous brands have already announced significant downsizing.

"The landscape is undeniably shifting," says Deborah Weinswig, CEO, Coresight Research. "While the pandemic accelerated existing trends, the underlying issues – overexpansion, changing consumer behavior, and the rise of e-commerce – remain." Globally, the impact is being felt most acutely in the US and parts of Europe, where traditional retail infrastructure was most entrenched. However, even emerging markets are witnessing a recalibration as consumers increasingly embrace online shopping.

And here are some examples of the meltdown. For example, JCPenney, once a department store giant, JCPenney filed for bankruptcy in 2020, closing hundreds of stores. While it emerged from bankruptcy, its footprint is significantly reduced, reflecting the struggles of mid-market department stores. The brand’s inability to adapt quickly enough to the digital landscape and its struggles with brand identity were major contributing factors.

Similarly, recently, Express filed for bankruptcy and announced the closure of over 90 stores. This highlights the ongoing challenges faced by apparel retailers targeting younger demographics, who are particularly susceptible to online trends and fast-fashion alternatives. Bed Bath & Beyond is another example. While not strictly apparel, the collapse of Bed Bath & Beyond serves as a cautionary tale. Once a retail giant, its failure to adapt to online competition and its reliance on outdated business models led to its demise. This demonstrates the fragility of even established retail brands in the current climate.

Other notable closures/restructuring included the likes of Gap, Banana Republic and even fast fashion brands like Forever 21 that have gone through periods of significant store closures and restructuring in recent years, demonstrating that no sector of the apparel industry is immune.

Why the crisis?

There are several factors behind this perfect storm. E-commerce dominance is a major one. The rise of online shopping has fundamentally altered consumer behavior. Convenience, price comparison, and a vast selection have lured customers away from brick-and-mortar stores.

Meanwhile, consumers too are increasingly prioritizing experiences over material possessions. Sustainability and ethical sourcing are also gaining importance, putting pressure on traditional retailers to adapt. Many retailers expanded aggressively during periods of economic growth, accumulating significant debt. The pandemic and subsequent economic uncertainties exposed these vulnerabilities.

Also, rising inflation and economic uncertainty are forcing consumers to tighten their belts, leading to decreased spending on discretionary items like apparel. The rise of fast fashion and now ultra fast fashion like Shein, has put immense pressure on traditional retailers to keep up with trends and offer competitive prices. As Neil Saunders, Managing Director, GlobalData Retail opines, “The consumer has evolved, and retailers must evolve with them. Those who fail to embrace digital innovation, curate compelling in-store experiences, and offer value-driven propositions will continue to struggle."

The future of apparel retail

The ‘retail apocalypse’ is not necessarily the end of brick-and-mortar stores. Rather, it signifies a period of profound transformation. The future of apparel retail lies in first the seamlessly integrating online and offline experiences. Adopting experiential retail that offer unique and engaging in-store environments. Leveraging data to understand customer preferences and tailor offerings. Embracing environmentally and socially responsible business models and reducing store footprints and focusing on curated assortments.

By Fashionating World
https://www.fashionatingworld.com/new1-2/unravelling-threads-are-apparel-stores-facing-a-retail-apocalypse