Market Insights


by | Posted on Mar 28, 2018

Apparel, as a category, has been a key driver of retail sales for decades. But with major changes being experienced in the industry, many are wondering what the future holds.

The Future Of Brick & Mortar

Headlines were dominated last year by setbacks in the traditional fashion retail industry. The struggles of the industry have been well documented, so much so that there is even a Wikipedia entry for “retail apocalypse”. Toys “R” Us, Sears, and the list goes on. Is it all doom and gloom though? Certainly, there are those that see a future in the traditional model, or some variation thereof.

Abercrombie and Fitch seem to be staging a comeback, after 4 years of disappointing sales, and with many in the industry questioning how much longer they will manage to stay around for. Sales are growing, and while the increase is modest for now, the numbers have exceeded expectations.

The brand has made some big strategic moves, including moving away from its controversial ad campaigns and hitting “restart” on its Instagram page.

Online is where it’s at

On the other side of the coin is the rampant success of many online retailers (not all, however, see more on this below). ASOS announced its results for the end of the 2017 year, and the numbers are impressive. Total revenues and total retail sales grew by 30%, UK retail sales by 23%, international sales by 32%, and US sales specifically were up by 28%.

ASOS defied calls early on in its development to open physical stores, and that decision is paying dividends.  

But Not For Everybody

The story is a lot more complicated than “blame Amazon”, as many are wont to do. There are a number of factors at play here, evidenced among other things by the number of online stores that are also struggling. NastyGal, the one time darling of online shopping, went bankrupt last year, and Bonobos, another stalwart, was swallowed by Walmart.

The industry as a whole is facing its toughest challenges yet. It seems that Americans are spending less on clothing, for reasons as diverse as the impact of social media, to the blurring of the distinction between “work” and “casual” wardrobes.

Indeed, if in 1977 clothing accounted for 6.2% of US household spending, today it’s down to half of that. Perhaps, as the article above notes, it’s because people are placing more emphasis on experiences – food, or travel – than on looking good, especially as they can now choose the time and place (and pose) to have a fashion impact via social media. What is for sure, is that where big-name retailers used to dictate the season’s fashion trends, these are now set by thousands of social media influencers who the big names, in turn, have to follow.

Where Is Amazon In All This?

Amazon’s latest move has been an interesting one. It has raised seller fees for specific categories, increasing the percentage of the sale it takes from third parties. These include categories like Clothing & Accessories (from 15% to 17%) and Handbags & Sunglasses (from 15% to 18% on items priced above $75).

In fact, apparel now carries the highest fees of all categories on Amazon.

Why raise the charges in an industry that’s already under pressure, and experiencing shrinking sales across the board? This question is especially pertinent after Amazon has repeatedly emphasized these areas as opportunities for growth, and they have been chief among Amazon’s focus recently.

There are a few possible answers. Some say that Amazon is doing this to squeeze 3rd-party sellers and increase the prominence of its own apparel offerings. Others say that Amazon feels so confident in its ability to sell apparel that it believes sellers will keep coming back despite the price increase, resulting in even higher profits. There are even those that see a scenario of a huge play by Amazon to push out the retailers hanging on the edge and consolidate mainstream shopping into the Amazon ecosystem.


Navigating the ever-changing tides of online commerce is tough enough. Doing so without a macro view of where the industry is going is a whole lot tougher. In order to compete today, e-commerce companies have to stay on top of trends, from high-level strategic moves of Amazon to product-level pricing changes of competitors. That’s where Market Beyond comes in. Market Beyond will become your partner in providing real-time, actionable insights, down to product level, to give you the tools necessary to succeed in this exciting environment.

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