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Inflation Sparks Shift: Shoppers Splurge on Niche Fashion Brands

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  • U.S. consumers are shifting their spending from major chains to lesser-known brands, favoring fashionable items over big-ticket purchases amid economic difficulties.
  • Specialty clothing and accessory brands like Birkenstock, Abercrombie & Fitch, and Vuori are experiencing growth, while high-cost items such as electronics and homeware see reduced demand.

Given their current economic difficulties, U.S. consumers are becoming more selective of which nice-to-have retail products they indulge in; purchasing away from major chains toward lesser known labels; clothing and accessory companies stand to benefit greatly from this shift.

Per a recent Reuters report, data derived from credit card transactions indicate a growing trend: consumers appear more inclined than before to spend on fashionable and trendy items while decreasing big ticket expenditures, favoring specialty brands and retailers over industry leaders.

Birkenstock, Abercrombie & Fitch and Vuori sales increased during the first quarter compared to same time last year by 3.2% for clothing sales and 0.4% for footwear purchases respectively. Conversely, demand for high-cost items such as electronics sales saw significant reduction by 1.9% while homeware purchases saw decrease of 4.2% over this same timeframe.

Consumers frequently search their wardrobes when looking for new retail products to purchase, according to “Nonessential Spending Deep Dive Edition” of Intelligence series “New Reality Check: The Paycheck-to-paycheck Report.” Research by Intelligence revealed that 70% of retail shoppers regularly or occasionally purchased non-essential “nice-to-have” items with clothing being the primary choice among these purchases.

Survey results involving over 3,400 U.S. consumers revealed that of those purchasing non-essential, non-grocery retail items, 36% stated clothing as their top pick, while 19% chose health and beauty as second most preferred category.

As consumers turn towards niche brands when purchasing apparel and accessories, Reuters’ report noted Michael Gunther from Consumer Edge as saying such as such specialized brands are increasingly preferred by their target consumers. According to Gunther’s comments at Consumer Edge cited by Reuters: “newer, more niche companies” in fashion are performing more strongly than “more established players.”

Bloomberg reported earlier this year that Kim Kardashian’s Skims brand, launched only five years prior, reached net sales of nearly one billion in 2015. Meanwhile Shein had over $32 billion in sales reported last year — nearly 50% higher than it reported the prior year according to The Wall Street Journal.

Young shoppers in particular are saving to spend on retail goods, according to an Intelligence study. “New Reality Check: The Paycheck-to-Paycheck Report – Why 60 Percent of Gen Z’s Live Paycheck to Paycheck.” In a survey involving more than 3,500 United States consumers, Generation Z stood out as being more likely to prioritize purchasing an expensive retail product as their top financial goal than contributing towards an upcoming event or show.

Not surprisingly, consumers tend to look for ways to cut back their clothing budgets every day. A study released last year entitled Consumer Inflation Sentiment: The False Appeal of Deal-Chasing Consumers found that 58% of shoppers who switched down from more expensive merchants and switched instead to cheaper stores were most likely making sacrifices on clothing purchases; four in ten shoppers had adopted more cost-cutting vendors as retailers for clothing purchases and accessories purchases.

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