Consumer Facts from Cotton Incorporated Lifestyle Monitor

With a focus on shoring up household savings in the face of still high unemployment and renewed fears of a European recession, American consumers have become increasingly deal-driven at the registers. Once drawn to mass merchants for their consistently low prices, consumers are now searching across channels, and of course across the Internet, to find the best price for their clothing purchases. But will this trend continue as the economy improves?

“We’re seeing the emergence of a new consumer – one who isn’t driven by brand or channel but rather comparison shopping and price,” says Kim Kitchings, Senior Director, Corporate Strategy and Program Metrics, Cotton Incorporated. “These consumers may have previously favored mass merchants, but are now doing their research online to find the best price and letting that dictate where they shop, whether at chain stores, specialty stores, or even department stores as the case may be.”

On average, consumers spend approximately $53 per month on clothing, which is down significantly from the average spent during the same time period in 2008 ($76), 2009 ($64), and 2010 ($60). These figures represent an overall decline of 30%, according to the Cotton Incorporated Lifestyle MonitorTM Survey.

“Today’s consumers are keeping a strict eye on expenditures,” Kitchings says. “Not only are they spending less on apparel each month than they have in years past, but they are also planning those purchases to ensure they stay within budget.”

Over time, Monitor data reveal, the percentage of consumers who plan their apparel purchases has increased significantly. In 2008, 65% of consumers planned their purchases; today, 71% say they do so. Accordingly, the percentage of consumers who buy on impulse has dropped, from 35% in 2008 to 29% in 2011.

As consumers changed how they spent their money on apparel, it should come as no surprise that they changed where they spent their money, too. What gains mass merchants had seen before 2009 evaporated in the aftermath of the recession.

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From the first nine months of 2008 to the same period in 2009, the percentage of consumers who preferred to shop at mass merchants for most of their clothing increased across several categories: from total consumers (24% to 27%) to those ages 25-34 (23% to 27%), and even impulse shoppers (23% to 27%), all turned to the so-called “big box” stores in search of the best deal.

“During this time period, comparable store sales for Walmart were increasing, while many other retailers were facing decreases,” says Kitchings.

From the first nine months of 2009 to the same period in 2011, however, those gains mass merchants saw simply disappeared, as consumers looking for bargains went elsewhere. The percentage of total consumers who preferred to shop at mass merchants dropped from 27% to 24%, as did the percentage of those ages 25-24 (27% to 22%) and impulse shoppers (27% to 22%).

Both WalMart and Target struggled with negative or volatile same store sales, a possible result not only of consumers’ shifting behaviors, but also from more competitive pricing in other categories, like chain stores, department stores, and specialty stores.

But mass merchants still have their devotees; Monitor data show the percentage of men who prefer to shop for apparel at mass merchants held steady from 2009 to 2011, at 28%, as did the percentage of consumers ages 13-24 (21%), and those making less than $25,000 a year (38% to 39%).

“For some groups of consumers, the convenience of mass merchants may be a significant benefit,” Kitchings says. “These types of stores have a wide range of inventory for those who prefer ‘one-stop-shopping,’ and consumers trust that they’re getting a good price.”

Other consumers on the hunt for the best deal have turned to chain stores, which have become an attractive alternative to mass merchants. The first nine months of 2008 to the same time period in 2011 saw gains in the percentages of women (22% to 25%) and consumers making $50 – $74,000 a year (27% to 32%) who prefer to shop for most of their clothing there, the Monitor survey reveals.

“Over the past few years, chain stores have become more price competitive, and have offered more fashionable apparel lines, in some cases partnering with high-end designers or celebrities,” Kitchings says. “And some consumers have responded with their wallets.”

Other consumers, however, have turned online for the best deal. Despite the logistical difficulties many e-tailers face, the percentage of consumers who shop for most of their clothing online is growing slowly but steadily, from 4% in 2008 to 6% in 2011. But many of these consumers still harbor concerns about the process, from shipping costs (89%) and clothing quality (81%) to the company’s return policy (80%) and the inability to try on the clothing (74%). And a full 71% remain concerned about the security of using their credit or debit cards online, according to Monitor data.

Yet e-tailers have also ramped up their online presence, offering consumer reviews, product close-ups, and in some cases, even social media capabilities. Levi’s® made headlines in 2010 when it announced its “Social Shopping” initiative, which essentially added sharing capabilities to each product it carried online. Now Facebook users could like specific products online and share those with friends.

Making the online shopping experience easier and more social has resonated with consumers, who shopped online in droves over the Thanksgiving weekend, including Cyber Monday.

A report from IBM Benchmark reveals the average online order rose 2.6%, to $193.24 on Cyber Monday. About 80% of retailers offered online deals, and 6.6% used a mobile device, up from 2.3% in 2012.

With optimism for the U.S. economy growing – even in light of the extreme volatility in Europe – the question remains whether consumers will shed their bargaining habits in favor of their pre-recessionary spending behavior.

As Kitchings notes, “The last three years have really challenged consumers to do more with less when shopping for apparel, and only time will tell if this shift is permanent or if brands and retailers will entice the customer to spend more.”