US apparel e-commerce market: low-price competition and reduction of high-priced inventory

It is learned that according to a report by DataWeave, US apparel e-commerce retailers are cutting prices and reducing inventory of high-priced products. The report analyzed seven retailers and ten brands in the United States between June 2022 and January 2023, covering more than 40,000 SKUs.

Retailers studied in the report include Dillard's, Macy's, Zappos and Nordstrom, as well as Amazon.

Amid high inflation, the clothing market is experiencing a "price cut"

The report shows that many clothing retailers lowered their prices between June 2022 and January 2023. Among them, Nordstrom had the largest price cut among the brands surveyed, with a price cut of 19%. Net-a-Porter, Saks Fifth Avenue, Neiman Marcus (ranked 73rd) and Dillard's also continued to cut prices during this period, with cuts of 14%, 8%, 6% and 6% respectively.

But according to Nordstrom's 2022 annual report, price cuts did not boost sales. The main reason is that clothing, as a non-essential expense, has become the first expense that consumers cut under high inflation. Any reduction in demand will lead to lower sales, higher markdown rates, and excessive promotions or increased marketing spending.

According to DataWeave, most of the brands surveyed were discounted more than 15% at the retailers that sold them: Joe's Jeans had an average discount of 25%; Silver Jeans Co had a discount of 22%; Mango had a discount of 19%; and Nike (No. 9) had a slightly lower average discount of 11%.

However, some retailers have increased prices, such as Macy's, which increased prices by an average of 18% over the seven-month period, and Zappos, which increased prices by 6%.

Clothing retailers focus on low-cost products

A survey of inventory items at different apparel retailers shows that supply chain pressures such as delayed shipments may still have an impact on companies. But some companies are better off than others. Nordstrom has kept almost 100% of its merchandise in stock over the past seven months. Macy's, Dillards and Zappos' inventory fell from 98%, 96% and 85% in July to 87%, 93% and 80% seven months later, respectively.

An examination of the merchandise in stock at various apparel retailers shows that supply chain pressures such as delayed shipments could still affect businesses. However, some retailers fared better, with Nordstrom keeping nearly 100% of its merchandise in stock throughout the period.

Inventory levels at Macy's, Dillards and Zappos fell from 98%, 96% and 85% in July to 87%, 93% and 80% seven months later, respectively.

Saks Fifth Avenue and Neiman Marcus appear to be much more affected by supply chain issues, with inventory levels of 45%-55% and 35%-45%, respectively, the report said. Neiman Marcus also said in February 2023 that it would focus on the top 2% of customers who drive 40% of sales, which could affect inventory.

The report also shows that retailers are differentiating the products they prioritize in stock. The report shows that retailers have higher inventory levels of non-premium-priced products every month, with inventory levels of premium-priced products falling 72% in January and inventory levels of other products falling 78%. Premium-priced products here refer to products in the top 20% of prices.

Editor✎ Ashley/

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