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As essentials have gotten more expensive, consumers are trying to save on clothes. The market share for “value apparel” increased almost 4% among Gen Z and millennial shoppers within the last year, according to new internal card data from Bank of America. The bank defines value apparel stores as those that serve customers with the lowest median income. In July, household spending on value apparel had increased 13% from July 2019.
And discounters are benefiting. TJX, the parent company of Marshalls and TJ Maxx, reported a 4% increase in consolidated comparable store sales in Q2, and CEO Ernie Herrman expressed confidence that its model will keep customers coming. “We’re convinced that consumers will keep seeking value,” he said. “We believe our strategy of trading across a broad range of income and age demographics differentiates us from other retailers and remains a tremendous advantage.”
Ross Stores also reported a 4% YoY increase in comparable store sales, and attributed the bump to higher-priced necessities driving customers toward value in their discretionary spending. “The customer is really dealing with high cost on necessities,” CEO Barbara Rentler said during a Q2 earnings call. “And I think the way for us to gain market share is really to continue down this value path.” The company plans to keep building on its value strategy in the fall, she added.
It’s not just well-established discount brands that are talking about the importance of value. Macy’s CEO Tony Spring said in the department store’s Q2 earnings call that customers are becoming “more discriminating” due to “ongoing macroeconomic uncertainty.” As a result, he said the company tried to strike a better balance between value and fashion in the quarter, which for Macy’s meant adjusting its promotional calendar and marketing strategy.
“We enhanced our promotions and delivered more targeted, personalized messages across categories and brands, and we invested in newness and proven areas of product strength while reducing our exposure to areas of softer demand,” Spring said.