How Will Retailers Overcome the Challenge of Flat Sales and Declining Fashion Store Revenue?

As consumer confidence declines, sales in the optional fashion category may be affected. Although retail sales in April remained relatively stable compared to March, certain categories have been experiencing decreasing sales in the first few months of 2024. It is particularly in fashion categories, which may be caused by weakening consumer confidence and rising prices in key non-optional categories.

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Sales In Fashion

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Year-over-year sales in fashion stores saw a decline in April, with apparel and accessories down by 0.9% and department stores experiencing a 5.3% decrease. Despite an overall increase of 3.6% in April sales compared to the previous year, the fashion segments, as well as furniture and home furnishings, showed declines. On the other hand, non-store (including e-commerce) sales increased by 12.8%, while restaurants and gasoline stations saw increases of 5.5% and 5.3% respectively.

Consumer Behaviour

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Macroeconomic factors are significantly influencing consumer behaviour, with political and global conflict concerns, as well as persistent price inflation in essential non-optional categories such as shelter and gasoline, impacting consumer perceptions. Additionally, food inflation remained unchanged in April but has increased by 2.2% over the last 12 months. Gasoline prices also rose by 2.8% in April, reflecting a 5.2% increase before seasonal adjustment compared to March.

Fashion Business

Consumers anticipate less favourable future business conditions, labour markets, and income expectations over the next six months. However, new vehicle sales from January through March increased by 4.2% compared to the previous year, while used vehicle sales saw a decline of 9.6% for the same period.

With April results as a basis, it is anticipated that fashion categories may experience further declines in the coming months.