Projections Through 2018: The Top Metro Areas for Fashion's 3 Hottest Segments

Projections Through 2018

THE TOP METRO AREAS FOR FASHION’S 3 HOTTEST SEGMENTS

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The apparel industry’s evolution has accelerated at an extreme rate over the past decade as both our world and our shopping experience become more digital.

While online retailers are broadening their

reach with a physical presence, brick and mortar

retailers are redefining their real estate strategies

to keep up with the changing retail landscape

by experimenting with new business models,

smaller footprints, new formats, and relocations

to areas attracting population growth.

As the retail real estate market rebounds and

apparel retailers continue to invest in improving

their business strategies, the fruits of their

labor finally seem to be paying off as consumer

spending on apparel is forecasted to grow at an

annual compounded rate of 3% between 2014

and 2018. Although the category’s growth may

appear modest, some apparel segments, such

as activewear and menswear, are experiencing

gains that are outpacing the overall market.

And while it’s not necessarily anything you

haven’t heard before, it’s imperative to pick

the best markets and the best sites for new

locations as well as new concept stores in order

to position your brand for long-term success in

this high-stakes market. In other words, success

will ultimately require a deep understanding of

your brand, your best customers, and your best

potential customers.

But which segments offer the best opportunities

to apparel retailers? The industry is buzzing

about the emerging strength of activewear,

increased interest in menswear, and the

continued dominance of women’s wear.

These segments are quickly proving to be

the driving force behind the growth in today’s

fashion business, which led Buxton to pose

the following questions:

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State of the Apparel Industry

OUR QUESTIONS

What markets are spending the most on apparel overall, on activewear, menswear and women’s wear?

Where are these segments’ best customers located in terms of dollars spent?

How will the top markets grow in the next five years?

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We analyzed the nation’s markets in order to identify the current and future top markets for the overall apparel industry as well as for three of the most prominent apparel segments – activewear, menswear and women’s wear – by measuring total market and per capita spending for each category.

We first looked at consumer expenditure estimates for 2013 using our consumer expenditure database, which provides an estimated amount spent per household during the time period of calendar year 2013.

Consumer expenditure estimates were calculated based upon data that included an analysis of individual respondent-level information from the Consumer Expenditure Survey conducted on behalf of the U.S. Bureau of Labor Statistics. The results of the survey provide estimates of the annual expenditure of the residents in each Core Based Statistical Area for each specified apparel category.

Using the figures from the 2013 consumer expenditure estimates as a base, we created a five year projection value, which is an estimate of average expenditure for 2018. The 2013 estimates were amended to allow for projected changes in spending levels and underlying

CBSA-level demographics over time.

The input data sources used to create the five year projections of consumer expenditure include, but are not limited to, the following:

U.S. Bureau of Labor Statistics – Consumer Expenditure Survey

U.S. Bureau of Labor Statistics – Consumer Price Index Statistics

Congressional Budget Office – Economic Macrodata – Historic Time Series

Congressional Budget Office – Economic Macrodata – Projections

It’s important to note that both the consumer expenditure estimates for 2013 and the consumer expenditure estimates for the five year projections are presented in terms of actual dollars spent within each 12 month period reported on, including the expected impact of inflation on consumer prices.

Finally, due to the high variance in population densities across the U.S., when measuring demand growth we took both quantitative and qualitative measures into consideration to assess change over time. This was accomplished by measuring both total expenditure change as well as the change in per capita expenditure for each category. By accounting for the qualitative increase (change per capita), high density areas won’t skew results due to having extreme increases based on the sheer volume of households able to purchase. By also accounting for the quantitative increase (total change), low density areas are discredited for simply having high rates of change based on small initial total expenditures.

In essence, the two measures balance one another to provide a robust categorical view of growth trends in the fashion space.

Methodology

CONGRESSIONAL BUDGET OFFICE


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The TOP 5 METRO AREAS for annual market spending on apparel in 2013 based on current year estimates are as follows:

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Overall Apparel Rankings

CBSA Metro Area 5 Yr Total Apparel Spend

CBSA Metro Area 5 Yr Average Per Capita Apparel Spend

New York-Northern New Jersey-Long Island, NY-NJ-PA Metro $14,726,432,710

Los Angeles-Long Beach-Santa Ana, CA Metro $8,958,915,125

Chicago-Joliet-Naperville, IL-IN-WI Metro $6,701,600,619

Washington-Arlington-Alexandria, DC-VA-MD-WV Metro $4,747,122,078

Philadelphia-Camden-Wilmington, PA-NJ-DE-MD Metro $4,693,034,396





Dallas-Fort Worth-Arlington, TX Metro $6,059,316,086

San Francisco-Oakland-Fremont, CA Metro $2,864

Seattle-Tacoma-Bellevue, WA Metro $2,720

Washington-Arlington-Alexandria, DC-VA-MD-WV Metro $2,703

Boston-Cambridge-Quincy, MA-NH Metro $2,695

San Diego-Carlsbad-San Marcos, CA Metro $2,646

Current Year Total Expenditure On All Apparel

5 Year Projected Total Expenditure On All Apparel

5 Year Projected Average Expenditure On All Apparel

CBSA Metro Area Total Apparel Spend


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The activewear category is booming – growing more than four times faster than the overall apparel industry and reaching $33 billion in 2013 – as both men and women trade in their jeans for yoga attire and athleisure wear. In 2014 alone, activewear is projected to grow 3.3%.

The latest evolution in fitness fashion and a push from consumers for a more active lifestyle

has been a catalyst for sports apparel retailers and traditional fashion retailers alike to make their own aggressive expansion moves in the activewear category.

So where is the most growth taking place?

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Activewear

CBSA Metro Area 5 Yr Total Activewear Spend

CBSA Metro Area 5 Yr Average Per Capita Activewear Spend

New York-Northern New Jersey-Long Island, NY-NJ-PA Metro $524,361,485

Los Angeles-Long Beach-Santa Ana, CA Metro $306,909,928

Chicago-Joliet-Naperville, IL-IN-WI Metro $258,546,026

Washington-Arlington-Alexandria, DC-VA-MD-WV Metro $192,377,231

Philadelphia-Camden-Wilmington, PA-NJ-DE-MD Metro $169,067,166

New York-Northern New Jersey-Long Island, NY-NJ-PA Metro $680,782,079

Los Angeles-Long Beach-Santa Ana, CA Metro $410,000,752

Chicago-Joliet-Naperville, IL-IN-WI Metro $339,280,842


Houston-Sugar Land-Baytown, TX Metro $204,421,886

Washington-Arlington-Alexandria, DC-VA-MD-WV Metro $110

San Jose-Sunnyvale-Santa Clara, CA Metro $109

Bridgeport-Stamford-Norwalk, CT Metro $103

Oxnard-Thousand Oaks-Ventura, CA Metro $103

San Francisco-Oakland-Fremont, CA Metro $102

5 Year Projected Total Expenditure On Activewear

5 Year Projected Average Expenditure On Activewear

CBSA Metro Area Total Activewear Spend

Current Year Total Expenditure On Activewear


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Menswear

CBSA Metro Area 5 Yr Total Menswear Spend

CBSA Metro Area 5 Yr Average Per Capita Menswear Spend




Dallas-Fort Worth-Arlington, TX Metro $916,792,071

Philadelphia-Camden-Wilmington, PA-NJ-DE-MD Metro $838,884,849



Dallas-Fort Worth-Arlington, TX Metro $1,236,142,415


Houston-Sugar Land-Baytown, TX Metro $1,132,954,644

Honolulu, HI Metro $527


Washington-Arlington-Alexandria, DC-VA-MD-WV Metro $518


Boston-Cambridge-Quincy, MA-NH Metro $498

5 Year Projected Total Expenditure On Menswear

5 Year Projected Average Expenditure On Menswear

CBSA Metro Area Average Menswear Spend

The world is experiencing a menaissance. Once an afterthought in the apparel landscape, male consumers are now becoming the new darlings of the fashion industry.

Exceeding growth in the women’s apparel segment for the past five years, menswear grew 5% in 2013 and shows no signs of slowing down. In the $400 billion U.S. men’s fashion industry, men’s-only clothing stores are set to bring in $9.6 billion in revenue in 2014.

Responding to the upsurge in demand for stylish menswear, brands are attempting to break boundaries and evolve their images while finding new sales channels and interactive platforms to reach this new customer base. Indeed, menswear is a promising segment in today’s fashion business – but where are the best menswear customers located?

Current Year Total Expenditure On Menswear


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Women’s clothing has always been strategically important to retailers – making up about 60% of the total market – and is benefiting from the growth in its subsegments like the plus-size clothing market.

The women’s apparel category grew 4% in 2013 with sales reaching $116.4 billion and is forecasted to have a continued 5% growth rate over the next 5 years.

Just as we’ve seen with men, women have also taken an increased interest in their appearance and are more in tune with the latest fashion trends. This, in turn, is driving an increased demand among women for stylish, on-trend clothing.

So where across the country are the most lucrative areas for women’s apparel spending?

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Women’s Wear

CBSA Metro Area 5 Yr Total Women’s Wear Spend

CBSA Metro Area 5 Yr Average Per Capita Women’s Wear Spend




Boston-Cambridge-Quincy, MA-NH Metro $1,283,596,402

San Francisco-Oakland-Fremont, CA Metro $1,257,498,053




Boston-Cambridge-Quincy, MA-NH Metro $1,683,350,607

San Francisco-Oakland-Fremont, CA Metro $1,655,146,738


San Francisco-Oakland-Fremont, CA Metro $955

Seattle-Tacoma-Bellevue, WA Metro $941

Minneapolis-St. Paul-Bloomington, MN-WI Metro $938


5 Year Projected Total Expenditure On Women’s Wear

5 Year Projected Average Expenditure On Women’s Wear

CBSA Metro Area Total Women’s Wear Spend

Current Year Total Expenditure On Women’s Wear


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The apparel market is on the edge of a major change as budding segments lure in retailers with their untapped potential, leading to an even more competitive environment.

For brands to be successful when they enter into any new category or expand their current presence, it will be critical for them not to lose their brand identity in the process. Because with every passing day, the number of good options grows and in order to win, brands have to give customers the right thing at the right time.

This means that brands need to know whether those changes will be embraced by both new and current customers, which ultimately requires a deep understanding of your brand, your customers and your potential customers as well as how to craft a solid real estate and marketing strategy. Retailers will need to know what types of offerings will resonate with their core customers in each of their different markets.

For growing apparel retailers, a substantial capital campaign often coincides with a shift in strategic plan. Suddenly, there’s a new premium placed on applying customer data, analytics and modeling to define, design and market future footprints as well as creating profiles of prospective customers in each new segment and growth plans to optimize merchandising categories.

As apparel retailers create new strategic plans, they need to answer some questions.

In mature markets the key question is, “Where are the best opportunities to

remove or relocate poor performing

locations, while continuing to infill

where appropriate?”

In growth markets, the key questions

are, “Where are the optimal locations

for new locations? How can we

optimally place new locations within

both their prospective markets and in

our current network?”

The best way to answer these questions is through a predictive retail model that takes into account customer profiles, transactions, each location’s performance and broader industry data sets. The tools provided by the predictive model will allow apparel retailers to:

If you need help determining whether or not entering into new categories would be a wise business move worth investing in, Buxton’s customer analytics solutions can tell you exactly what your potential would be, what your best prospective customers would look like and where the highest concentrations of those potential customers would be.

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The Bottom Line

Want to discover what your top growth markets are and how to reach your U.S. potential? Contact us – we can help.

Benchmark current locations’ performance against model forecasts of how those locations should perform

Forecast the potential for growth in emerging markets and apparel categories

Identify the ultimate number of stores that you can support for each market

Create more targeted marketing campaigns



Projections Through 2018: The Top Metro Areas for Fashion's 3 Hottest Segments

Retail

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