Underwhelming once again might be the best way to describe the 1.7 per cent annual increase in Canadian retail apparel sales during 2018, says a North American retail expert.
“Growth in the 2018 market was driven by significant increases in both ecommerce and luxury apparel sales. During 2018 men’s apparel sales increased by 3.5 per cent in 2018, while women’s sales increased 1.4 per cent, sales of juvenile apparel decreased by 0.8 per cent. Canadian retail apparel sales during 2018 totaled $30.9 billion. Women’s apparel accounted for 55 per cent of total apparel sales.”
The Sarasota, Florida-based company, which has been around for 27 years, monitors the Canadian and Mexican retail clothing markets.
“There were no new trends in 2018. They were continuations of recent trends. Did I see anything brand new coming in the market or affecting the apparel market? No. But I did see continuation of the growth, for example, of the luxury apparel market. We saw the continuation of the athleisure market. We saw the continuation of the ecommerce market. And we continued to show that consumers were not really trading up or down but they were moving sideways within channels of distribution,” said Harris.
“In most industries there is a trend of consumers trading up or trading down. That has not happened in clothing in general. What people have done they for example a couple of years ago stopped going to Sears but then they went to Winners. That isn’t really trading down. It’s trading within a channel. Most of the market is concentrated in the middle of the market and people are moving all around in that because there’s no consumer loyalty.”
Harris said the other major trend that is continuing is the growth of off-price retailers – selling brand names at a discounted price. Winners, The Rack (Nordstrom), Marshalls all define the off-price channel which is the fastest growing channel for apparel in the country.
“During 2018, off-price stores was again one of the three channels whose share increased. The increasing number of Winners, Marshalls, Off-Fifth and The Rack stores served to drive the channel’s share increase. Sporting Goods stores also continued to gain share, while the “all other” outlets channel, which includes Costco and all internet retailers, including Amazon Canada, Frank + Oak and Indochino, not unexpectedly gained share,” said the report.
“The 10 largest apparel retailers collectively accounted for 31.4 per cent of 2018 apparel sales. Winners with 271 stores at the end of Q4 2018, continued to be Canada’s largest apparel retailer. Its share increased from 6.6 per cent in 2015 to 7.7 per cent in 2018. Retailers gaining share in 2018 included Winners, Old Navy and H&M. Retailers losing share in 2018 included The Gap, and the conglomerate Reitmans (Canada) Ltd.”
In his Canadian Apparel Insights Report, Harris said the 3.5 per cent growth in men’s apparel was driven by sales increases in all men’s categories with the exception of suits/sport coats (-4.4 per cent). Sales of pants/tops the most important men’s category increased by three per cent. The three men’s categories registering the largest sales increases during 2018 were other men’s clothing/ workwear (+8.1 per cent), accessories (+6.6 per cent) and outerwear (+5.7 per cent).
In the women’s market, other clothing (-3.8 per cent) and lingerie (-1.6 per cent) were the only two categories to register sales declines. Sales of pants/tops, the most important women’s category, increased by only 0.6 per cent, while fashion accessories (+8.3 per cent) and outerwear (+4.3 per cent) reported the largest category sales increases, according to his report.
Harris said the luxury market has seen a dramatic increase in the number of retail outlets whether that be on the high streets like Bloor in Toronto or in Vancouver.
“The malls have also added luxury retailers. In a sense the luxury retailers have come to the people. They don’t have to come downtown. They’re now out in Yorkville,” said Harris.
“You also have an influx of new foreign luxury apparel retailers and those are drawing interest. People had never had a chance to buy from them. They knew about them but now they’re here and they’ve added a chance to do that. That has helped I think immensely. It’s more availability than anything else that’s driving it.”
“One more thing. The continual influx of foreign tourists especially from places like Japan and China where we’ve had a steady growth of people coming in. These people flock to Canadian luxury retailers because of the value of the Canadian dollar.”
Harris said the trends in the retail industry will likely continue this year but if in the second half of the year the Canadian economy moves toward a recession there might be some cutback in the growth that has been experienced in some segments.
“The growth of the Canadian apparel market is highly correlated to the growth of Canada’s GDP and if Canada’s GDP all of a sudden starts tanking that will have some effect on apparel sales, especially we believe at the luxury end of the market,” added Harris.