About weekly, I get this question from someone who sees the headlines but doesn't follow US retail - specifically the fashion segment of the industry - closely. Without spewing a lot of stats (which largely are Googleable), I usually touch on some or all of the following:
- Mall and store traffic is down. If the sales resulting from that traffic were going to these stores' own e-commerce businesses, it would be okay. Not ideal, because e-commerce margins often are tighter than store margins, but okay. But too often these sales aren't staying within the same company. Instead, they're going to Amazon, new brands, or out of the market for goods altogether.
- It's becoming more expensive to acquire new customers through marketing. Free reach through Facebook and Instagram has dwindled, ad prices are up, and new strategies like native content and Snapchat require employees to handle them.
- So many brands have become ubiquitous, as I've said before. Their broad availability erodes customer loyalty, making it harder to amortize the customer acquisition costs described above. When competitors sell so much of the same product, they have to match each other's prices, promotions and perks, hurting profitability.
- Important population segments are spending less on fashion. As people age out of the work force, their need for apparel wanes. In this case, the Baby Boomers are significant in numbers and the younger generations replacing them prioritize spending on experiences and electronics rather than fashion. So there's a squeeze at both ends of the age spectrum.
- We've become infinitely more casual as a society. Generally speaking, leggings cost less than denim, sweatshirts less than dresses, sneakers less than boots or heels.