1. style and fashion
2. clothing

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Family Clothing Stores in the US January 2010 1
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Clothing prices cut: Retailers will save from
cheap import sourcing and lower tariffs
IBISWorld Industry Report 44814
Family Clothing Stores in the US
January 2010
Ellada Mirimanian
2 About this Industry
16 International Trade
34 Industry Volatility
2
Industry Definition
18 Business Locations
35 Regulation & Policy
2
Main Activities
2
Similar Industries
21Competitive Landscape
3
Additional Resources
21 Market Share Concentration
4Industry at a Glance
36 Industry Assistance
36 Taxation Issues
21 Key Success Factors
37 Key Statistics
21 Cost Structure Benchmarks
37 Industry Data
22 Basis of Competition
37 Annual Change
5Industry Performance
23 Barriers to Entry
37 Key Ratios
5
Executive Summary
24 Industry Globalization
38 Historical Performance
5
Key External Drivers
6
Current Performance
25Major Companies
39 Jargon & Glossary
9
Industry Outlook
25 The Gap, Inc.
11 Industry Life Cycle
27 The TJX Companies, Inc.
28 Ross Stores, Inc.
13 Products & Markets
13 Supply Chain
32Operating Conditions
13 Products & Services
32 Structural Risk Index
15 Demand Determinants
32 Investment Requirements
15 Major Markets
33 Technology & Systems
Family Clothing Stores in the US January 2010 2
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About this Industry
Industry Definition
Retailers stock a general line of new
clothing for men, women, and children,
without specializing in sales for an
individual gender or age group. These
Main Activities
The primary activities of this industry are
establishments may provide basic
alterations, such as hemming, taking in
or letting out seams, or lengthening or
shortening sleeves.
Family clothing stores
Unisex clothing stores
Western wear stores
The major products and services in this industry are
Children’s wear
Men’s wear
Women’s wear
Similar Industries
44811 Men’s Clothing Stores in the US
Retailing new men’s and boys’ clothing.
44812 Women’s Clothing Stores in the US
Retailing new women’s, misses’ and juniors’ clothing.
44813 Children’s & Infants’ Clothing Stores in the US
Retailing new children’s and infants’ clothing.
44819 Lingerie, Swimwear, Uniform & Bridal Stores in the US
Retailing specialized new apparel, such as raincoats, bridal gowns, leather coats, fur apparel, and swimwear.
45211 Department Stores in the US
Retailing new men’s and boys’, women’s and girls’, and children’s and infants’ clothing.
45331 Used Goods Stores in the US
Retailing secondhand clothes.
45411a E-Commerce & Online Auctions in the US
Companies provide websites for, and facilitate, consumer-to-consumer or business-to-business trade in
clothing on an auction and sales basis using the internet.
45411b Mail Order in the US
Companies retail clothing via mail catalogs or television, and from catalog showrooms or mail-order houses,
and provide internet and mail-order sales.
81149b Other Personal and Household Goods (except Boat, Motorcycle and Bicycle) Repair and
Maintenance in the US
Providing clothing alterations and repairs.
Family Clothing Stores in the US January 2010 3
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About this Industry
Additional Resources
For additional information on this industry
www.apparelandfootwear.org
American Apparel & Footwear Association
www.census.gov
US Census Bureau
www.hhs.gov
US Dept. of Health & Human Services
www.ibisworld.com
Family Clothing Stores in the US January 2010 4
Industry at a Glance
Family Clothing Stores in 2010
Key Statistics
Snapshot
Revenue
Annual Growth 05-10
Annual Growth 10-15
Profit
Wages
Businesses
$84.4bn –0.4%
$2.5bn
$9.1bn
Population growth rate
Revenue vs. employment growth
Market Share
The Gap, Inc.
15.0%
20
1.05
15
Ross Stores, Inc.
6.9%
1.00
10
% change
% change
The TJX
Companies, Inc.
13.4%
5
0
−10
0.95
0.90
−5
Year 01
2.7%
33,760
03
05
07
Revenue
09
11
13
0.85
Year
15
02
04
06
08
10
12
14
Employment
SOURCE: WWW.IBISWORLD.COM
p. 25
Business locations
Key External Drivers
1,340
Population growth rate
971
New England
Rocky Mountains
7,127
1,516
Consumer
sentiment index
Plains
Per capita disposable
income
Southeast
2,948
Great Lakes
Competition from
department stores
2,994
Southwest
4,095
West
3,668
p. 5
Mid-Atlantic
Industry Structure
Life Cycle Stage
Revenue Volatility
Investment Requirements
SOURCE:
WWW.IBISWORLD.COM
SOURCE:
WWW.IBISWORLD.COM
Mature
Low
Medium
Industry Assistance
Low
Concentration Level
Medium
For additional statistics and time series see the appendix on page 37
Regulation Level
Technology Change
Barriers to Entry
Medium
Low
Medium
Industry Globalization
Low
Competition Level
High
Family Clothing Stores in the US January 2010 5
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Industry Performance
Executive Summary | Key External Drivers | Current Performance
Industry Outlook | Life Cycle Stage
Executive
Summary
It seems that shoppers have been more
content to window shop than walk the
shop floor. With industry revenue
expected to decrease by 2.8% over 2009
to $84 billion, representing about half of
the $156 billion clothing sector, sales are
fairly moderate for family clothing stores
in the US. This is good news when
compared to the rest of the retail
climate. So much so, that this industry is
set to outperform the sector average,
suggesting that at times of low economic
growth family specific apparel is still
generating demand. Aside from revenue,
which has seen real annualized average
growth of 0.4% in the five years to 2009,
industry performance has been below
par with establishment and employment
numbers, and wages shrinking. Sales will
likely be supported by major companies,
but any small gains will only result from
operators who open new stores.
Price deflation for apparel means that
retailers can pass cost savings to
consumers. This is helped by a
predominantly large volume of clothing
being sourced from China, with
relatively low production costs for men’s,
women’s and children’s clothing. An
import quota, established by the World
Trade Organization (WTO), which
ensured that low wage countries with
unfulfilled export quotas were able to
specialize in the final assembly of
clothing products, was removed on
January 1, 2005. Subsequent temporary
measures to limit apparel growth rates
where imports were perceived to be too
high, may hinder the rate at which
apparel prices will decline, thereby
affecting potential gains in industry
demand.
Key External Drivers
Population growth rate
The level of population growth affects
demand for family clothing. As stores in
this industry retail clothing for all
genders and age groups, demand
increases with population growth.
Population growth is driven by three key
factors, the level of fertility, mortality and
the level of international immigration.
clothing items. When real household
disposable income increases, consumers
have more discretionary power to
purchase items such as clothing.
Consumers will not only raise the
quantity of clothing purchases but also
the quality. This means a propensity to
purchase brand and labeled apparel. In
2008, the top five per capita income
earning states/districts included the
District of Columbia, Connecticut, New
Jersey, Wyoming and Massachusetts.
Those with the lowest incomes included
Utah, Mississippi, West Virginia,
Arkansas and Kentucky.
Consumer sentiment index
The level of consumer confidence affects
household expenditure in general.
Sentiment is an important indicator for
future shopping preferences. When
consumer perceptions of the economy are
positive and consumer confidence is high,
households tend to spend more freely on
items such as clothing.
Per capita disposable income
Fluctuations in real household disposable
income affect consumer demand for
Competition from department stores
Clothing retailers are affected by
competition from substitutes such as
department stores. As consumers
purchase more clothing from department
stores, demand for clothing in family
clothing stores is likely to decrease.
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Industry Performance
Key External Drivers
continued
Department stores pose as a serious
competitor given that nearly half of
department store sales are driven from
clothing sales. Women’s clothing
dominate sales followed by men’s and
children’s clothing.
Per capita disposable income
1.05
4
1.02
3
0.98
% change
% change
Population growth rate
0.95
0.92
0.85
1
0
0.88
Year
2
02
04
06
08
10
12
14
−1
Year
03
05
07
09
11
13
15
SOURCE: WWW.IBISWORLD.COM
Current
Performance
As consumers’ pockets narrow, hand-medowns could present an attractive
alternative in times of uncertainty. Retail
spending for clothing in America has lost
momentum, with five year average sector
growth declining by 0.1%. Weak
consumer sentiment, together with a
distressed housing market and softening
economic growth, has made many
Americans cautious with their
discretionary expenditure. Relative to the
rest of the overall retail economy though
(most notably the home renovations
market, where average sector revenue is
in decline), clothing sales over a longer
horizon are seen to perform better then
most retail industries, for example,
industry revenue for Family Clothing
Stores is estimated to rise by an average
rate of 0.4% per annum. However, over
the shorter term industry sales have
taken a hit with revenue estimated to fall
by 2.8% over 2009, following a decline of
3.2% the previous year.
Stores are feeling the
downturn
The economy is staring at a very steep,
downward trajectory. Declining
household wealth, rising unemployment,
tight credit conditions and an unclear
economic picture is forcing many
households to cut back discretionary
spending even for an industry once
thought to be somewhat resilient to
tough economic conditions. Previously,
economic uncertainties have general
appealed to price sensitive households,
however the severity of this recession is
seen to be large enough to impact family
clothing sales. Real GDP is forecast to be
in decline over 2009, with the first half
of the year particularly feeling the brunt
of this fall. Household income will also
be in decline over the year, while labor
market conditions continue to worsen,
as the recorded unemployment rate is
predicted to nearly double between
2008 and 2009. This will lead to further
job insecurity and financial instability,
as reflected by expectations of another
Family Clothing Stores in the US January 2010 7
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Industry Performance
slump in consumer sentiment. However
it wasn’t until 2008, that household
consumer sentiment took a double digit
dive in sentiment, even higher than that
experienced just after the events of
September 2001. According to company
financials of the industry’s leading
retailers, The Gap saw consolidated
clothing sales slump by 7.8% over 2008,
while The TJX Company experienced a
5.2% decline in revenue growth rate. In
contrast Ross Stores experienced an
increase in sales. This was due to the
company’s efforts in expanding their low
end retail operations like Dress for Less
and dd’s DISCOUNT stores. At an
industry level, revenue over 2008
declined by 3.2%. Much of this was
attributed to incremental losses
associated with store closures. For
example, IBISWorld estimates that over
2008, the total number of retail
locations for family clothing outlets
declined by 5.6%, to 34,564 stores.
Share of the economy
0.115
0.110
% of GDP
Stores are feeling the
downturn
continued
0.105
0.100
0.095
0.090
Year 01
03
05
07
09
11
13
15
SOURCE: WWW.IBISWORLD.COM
Many retailers either closed under
performing stores or exited the market
altogether. For example, feeling the
brunt of the recession, Goody’s Family
Clothing, Inc., filed for bankruptcy
protection in 2008, followed by the
decision to liquidate the company over
2009.
Earlier years
Yearly industry revenue growth has
slowed since 2005, with the largest drop
occurring in 2006. Revenue fell by 1.6
percentage points in growth rate, to 2.6%
in 2006. High interest rates that raised
the cost of debt and reduced the
availability of income, coupled with
volatile gasoline prices, reduced
household sentiment. The 1.5% decline in
consolidated revenue for The Gap
reflected the state of the industry.
Further challenges in 2007, raised
uncertainty, which drove consumers on
lower incomes to purchase items based
on price. Taking the size of stores within
this industry into account, falling apparel
prices and a trend for industry
participants to seek increased economies
of scale led many family clothing store
operators to lower prices relative to other
similar clothing industries.
Low income
households targeted
The top four major players in this
industry are TJX Companies, The Gap,
Ross Stores and Abercrombie & Fitch.
Together, these retailers account for
nearly half of industry revenue,
indicating a medium level of industry
concentration. Over the current
performance period, the discount or
off-price retailers, such as TJX, Ross
Stores, Stein Mart and Goody’s,
experienced positive growth. Ross Stores
now actively targets low income
households through dd’s DISCOUNTS,
which was launched in August 2004.
Family Clothing Stores in the US January 2010 8
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Industry Performance
Low income
households targeted
continued
The company believes that this is a
growth market and that these low
income households are currently
underserved in the retail environment.
However, as economic conditions
worsen and the unemployment rate
rises, most low income earning
households are at the forefront of
company redundancies, aiming to cut
costs.
So... what do
exchange rates have
to do with this?
Although exports and imports are
accounted for at the manufacturing level,
retailers in this industry are affected by
global sourcing patterns, trade
liberalization and exchange rate
fluctuations. Changes in exchange rates
and the US dollar have the ability to
make the purchase price more or less
affordable. For example, Abercrombie &
Fitch export their apparel overseas, so an
increase on the exchange rate will
ultimately impact final company revenue.
The old trade system of import quotas
rewarded these low wage countries with
unfulfilled export quotas as offshore
assembly centers. On 1 January 2005,
these import restrictions were removed
and trade in textiles and clothing was
liberalized. Unfortunately for consumers,
a number of special interest groups
lobbied the Government to intervene
after apparel imports from China in the
first quarter of 2005 were considerably
more than they expected. A number of
temporary measures were put in place
and in October 2005 it was announced
that selected apparel growth would be
limited to maximum growth rates over
the next few years. While this may slow
the inevitable decline for the US textile
manufacturing industry, it will also result
in prices not falling as fast as they
otherwise might have. For the Family
Clothing Stores industry, which is
particularly price sensitive, this may seek
to subdue potential gains in demand that
may have occurred if intervention was
avoided.
Attention all
fashionistas, clothing
prices have declined
Over the current performance period,
apparel prices have declined. Price
deflation has been evident as an
increasing number of retailers stock
men’s, women’s and children’s clothing
that have been sourced from cheap
apparel producing nations, which have
been passed on to consumers in the form
of lower retail prices. Offshore product
sourcing is occurring from China, which
had and has a lower cost of production.
However, as the nation’s minimum wage
rises and so to does the cost of
production, imported clothing will favor
other nations like the Philippines and
Vietnam who continue to produce cheap
apparel. The average price paid by
American households for clothing has
declined against all household
Sourcing
from cheap
producing nations has been
passed on in the form of
lower retail prices
merchandise. Over 2008, retail prices for
all household goods rise by 3.8%, while
all apparel fell by 0.1%. Prices for
women’s clothing fell the most by 2.5%
over 2008, with ladies suits and girl’s
apparel feeling the most heat. The
declines in these categories reflect the
unprecedented level of deep discounting,
following a significant contraction in
store traffic across the entire retail sector
in America.
Family Clothing Stores in the US January 2010 9
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Industry Performance
Industry
Outlook
Very little material change is expected in
the next five years, with just a few scraps
of growth as the rag trade picks up in
overseas markets. The future of American
retailers is predicted to be moderate, with
Apparel imports are
set to rise
Industry revenue is forecast to increase
by an average annualized rate of 2.2%
per annum over the outlook period, to
$93.4 billion by the end of 2014. Over
this period, the Family Clothing Stores
industry will outperform the sector
average. Movements in future income
and consumer sentiment are predicted
to be increasingly more important when
assessing the future sales performance
of this industry. This will have a positive
impact on the industry’s contribution to
the economy, as forecast by industry
value added. Over the next five years,
industry value added is forecast to grow
by 4.2% per annum, to $15.1 billion,
reaching levels once experienced over a
booking economy over the middle of the
decade. Value added growth of 4.2% per
annum implies that this industry will
out perform future economic growth.
Industry revenue over 2010 will not
reach the highs once experienced over
the economic boom. However, industry
sales are predicted to recover from two
consecutive declines to rise by 0.5%,
from 2009. Additional growth will be
restrained by a continued weakness in
the US labor market, as the
unemployment rate reaches a high of
10%. With many still out of jobs,
Americans will continue to spend
cautiously with clothing purchases
continuing to take a back seat to
everyday consumables. Momentum for
family clothing purchases will arise from
real GDP and income growth over the
last two quarters of 2009, providing the
perception the economic wheel is
beginning to pick up pace. Households
will respond viewed by an increase in
sector revenue rising by less than 1%.
Retailers will increasingly source clothing
from new and emerging markets, with
plus size clothing becoming an
increasingly important area of growth.
With
many still out of jobs,
Americans will continue
to spend cautiously on
clothing purchases
the overall mood of consumers, with
consumer sentiment forecast to increase
by 5.8% over 2010, compared to slumps
in 2008 and 2009. Recovering economic
conditions coupled with still low retail
prices for computers will give sales a
slight boost. Furthermore, with tariff
rates scheduled to be cut by another 5%
in 2010, countries such as China will be
able to import a greater amount of
apparel to the US, which will help lower
apparel prices even further over the next
five years. This will also pass on savings
to retailers, which will improve gross
profit margins. During this time,
establishment growth will slow as the
market becomes increasingly saturated.
Major and minor players will seek to
drive profit from cost savings as the end
of the business cycle approaches.
Industry sales are forecast to exceed
the $90 billion mark at the end of 2014,
while it contributes 16% to the general
production of the economy. Part of the
industry’s growth is predicted to be
organic, attributed to incremental
increases associated with future store
growth. For example, total
establishment numbers are forecast to
grow by 3.7% per annum over the next
five years. New store growth will largely
be generated from major players
expanding their retail presence rather
Family Clothing Stores in the US January 2010 10
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Industry Performance
Apparel imports are
set to rise
continued
than new operators entering the
industry. This will ultimately create new
retail employment opportunities, with
an anticipated increase in the total
number of people employed in the
industry to 706,104 by the end of 2014.
However, newly created jobs are largely
expected to be casual or part time, given
the highly casualized nature of retail
jobs.
Demand for men’s and women’s plus
size clothing is predicted to grow over
Global change in
sourcing clothing
Quotas for apparel and other textiles
expired on January 1, 2005, which led to
a substantial increase in apparel
volumes, particularly from low cost
producers and predominantly from
China. According to the International
Trade Commission, around 37% of
women’s and girls’ apparel was sourced
from China in 2008, with the second
largest importer Vietnam accounting for
only 8% of imports. This suggests that
China has dominated the sourcing of
apparel to America. Price deflation at the
retail end has meant that retailers have
remained competitive by passing cost
savings to customers. However, an
increase in China’s minimum wage and
higher prices over the next five years will
not make China immune to increasing
production costs. Instead American
wholesalers will seek cheaper locations
for apparel. Indonesia, India, Vietnam,
and Cambodia may emerge as new
clothing markets.
Maintaining low prices over the next
five year period will become an
increasingly significant challenge as
competition intensifies, especially for
retailers that traditionally market to
price sensitive consumers (Ross Stores
opened dd’s DISCOUNTS stores in
August 2004 to target this market).
Apart from Abercrombie & Fitch, which
have an excellent array of products and
brand appeal, margin growth is more
likely to come from the supply side than
higher prices.
Convenience will not just be limited to
the geographic location of stores. There
will be greater functionality of online
shopping platforms. E-tailing is likely to
achieve strong growth during the
outlook period both in terms of
products sold and potential customers.
Given that many larger American
retailers already have a presence in this
market, industry participants are likely
to attract increased demand
domestically and internationally.
Industry participants in other countries
lag their American counterparts when it
comes to offering a wide range of
products at competitive prices using an
effective and functional online shopping
platform.
From retail to e-tail
the next five years. Future demand in
this area will mean that family clothing
retailers will need to stock a larger range
of fashionable clothing. The rise in
apparel sizes reflects an increasingly
overweight American population.
According to the Department of Health
and Human Services, there has been a
dramatic increase in obesity since the
mid 1980s (a higher share of overweight
people live in the South East region of
the country).
Indonesia,
India, Vietnam,
and Cambodia may emerge
as new clothing sources
Family Clothing Stores in the US January 2010 11
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Industry Performance
Life Cycle Stage
The growth of family apparel discount stores has saturated the market
The continued growth of major players illustrates how
large businesses benefit from economies of scale
Industry value-added is expected to underperform
overall economic growth
A low likelihood of radical product innovation exists
% Growth of profit/GdP
The share of non‑employer firms has fallen, suggesting consolidation
maturity
30
Quality Growth
Company
consolidation;
level of economic
importance stable
25
High growth in economic
importance; weaker companies
close down; developed
technology and markets
Key Features of a mature industry
Revenue grows at same pace as economy
Company numbers stabilize; M&A stage
Established technology & processes
Total market acceptance of product & brand
Rationalization of low margin products & brands
20
15
Quantity Growth
Many new companies;
minor growth in economic
importance; substantial
technology change
10
5
children’s & infants’
clothing stores
Family clothing stores
0
shake-out
decline
shake-out
–5
women’s clothing stores
men’s clothing stores
Potential Hidden Gems
Time wasters
Crash women’s
or Grow? & Girls’Future
Industries
Apparel
–10
–10
Hobby Industries
manufacturing
–5
0
5
10
15
20
25
30
% Growth of establishments
SOURCE: WWW.IBISWORLD.COM
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Industry Performance
Industry Life Cycle
This
industry
is Mature
Operating in a fairly established sector
and with little opportunities family
clothing stores continues to operate in
the mature stage of its life cycle.
Family clothing stores operate in a
heavily saturated market, with heavy
product saturation and competitive
pressure retailers need to fight even
harder for the consumer dollar. For
specialized family clothing retailers like
The Gap not only compete with like
minded retailers but also with retailers in
different industries like department
stores, specific women’s, men’s and
children’s clothing stores, as well as
warehouse clubs and discount retailers.
Within the specific Family Clothing
Stores industry, major players have
expanded over the past five years. Gap,
Stein Mart and Abercrombie & Fitch have
grown through internal store openings
and new store concepts. In addition, Ross
Stores has recently expanded through the
opening of dd’s DISCOUNTS, which
targets low income households, while
Abercrombie & Fitch have introduced
RUEHL, an aspirational brand with a
New York heritage.
Over the past few years, the discount
or off-price segment of this industry has
expanded rapidly through retailers such
as Ross Stores, TJX, Stein Mart and
Goody’s Family Clothing. Many
consumers are now price conscious and
are able to buy in-season, brand name
apparel from these retailers at substantial
discounts. This trend is expected to
continue over the next five years.
The industry’s contribution to the
overall production of the economy, as
measured by industry value added is
expected to decline by an average rate of
1.3% per annum. A fall of 1.3% per
annum implies that the Family Clothing
Stores industry will under perform,
relative to domestic GDP.
Family Clothing Stores in the US January 2010 13
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Products & Markets
Supply Chain | Products & Services | Demand Determinants
Major Markets | International Trade | Business Locations
Supply Chain
Key buying industries
9901Consumers in the US
Consumers are the key buyers of family clothing.
Key selling industries
31522Men’s & Boys’ Apparel Manufacturing in the US
This industry manufactures and supplies men’s and boys’ clothing.
31523Women’s & Girls’ Apparel Manufacturing in the US
This industry manufactures and supplies women’s and girls’ clothing.
42232Men’s & Boys’ Apparel Wholesaling in the US
This industry supplies wholesale men’s and boys’ clothing apparel and accessories.
42233Women’s, Children’s & Infants’ Apparel Wholesaling in the US
This industry supplies women’s and children’s clothing apparel and accessories.
Products & Services
Retailers in this industry carry a wide
range of clothing for women, men and
children. The respective product
segments can also be sourced from
specialist clothing retailers like Women’s
and Girl’s Clothing Stores industry and
the Men’s and Boy’s Clothing Stores
industry.
Women’s wear
Women’s wear dominates sales from the
Family Clothing Stores industry, by
accounting for approximately half of the
total product segmentation as women
generally spend more on clothing than
men (a greater range of clothing is also
available). Furthermore, women on
average own multiple number of pants,
blouses, shirts etc. Items in this segment
include jeans, pants, tops, dresses,
blouses, t-shirts and jackets. Accounting
for the third highest market share in the
industry, ladies fashion dominate sales
for Ross Stores. Representing for 32% of
all store merchandise, this product
category has experienced a decline since
2005 where it accounted for 34% of
ladies clothing. This was at the expense
of rising sales from home furnishing and
children’s wear. On the other hand sales
for women’s wear increased fro
Abercrombie & Fitch, from 42% in 2005
to 45% in 2007. Once thought to be
recession proof, women’s clothing sales
are taking a hit. For example, revenue for
specialist women’s clothing stores
estimated to decline by an average rate of
0.8% per annum, with 2009 falling by
6.5%. Despite this IBISWorld expects
sales to rebound along with consumer
sentiment. Over the next five year, one
growth area for women’s wear will be
plus size clothing. According to the
American Obesity Association, more than
half of adult women in the United States
are overweight and more than one third
obese. This is a trend that is not expected
to reverse over the next five year period.
Men’s wear
Representing for the second greatest
product segment, men’s wear includes a
range of clothing like suits, sport jackets,
ties, white shirts and all kinds of casual
wear. Family Clothing Stores that retail
men’s wear are exposed to a high level of
external competition from department
stores (including J.C. Penny, Federated,
Sears Roebuck and May Department
Stores), mass merchandisers (including
Target and Wal-Mart) and family
clothing stores (including Gap, Ross
Stores and Abercrombie & Fitch). Many
men shop for clothes with their wives,
Family Clothing Stores in the US January 2010 14
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Products & Markets
Products & Services
continued
girlfriends or partners, so they often buy
men’s clothing in department stores or
family clothing stores, which also retail
women’s clothing. Male clothing stores
are characterized by their volatility in
relation to the health or lack thereof, of
the economy. This is due to men
generally purchasing clothing out of need
rather than a function of fashion or style.
Whilst there are always exceptions,
notably at the high end, the majority of
male clothing sold is somewhat
commoditized and the major basis of
competition is price and comfort.
Subsequently, when economic
uncertainty reveals its ugly head,
spending within this industry tends to
contract at a faster rate relative to
women’s wear.
During the dot com boom, slacks and
casual wear represented industry product
growth at the expense of traditional suit
and formal wear sales. Many earmarked
that this trend would continue,
potentially leading to casual wear seven
days a week for many white collar
workers. How times have changed. Since
the spectacular dot com crash at the turn
of the millennium, suit and formal wear
has made a stunning resurgence, with
casual wear being relegated to a
maximum of one day a week in many
instances. This trend has been
particularly driven by the baby boomer
generation, which are reaching their peak
income
Children’s wear
The children’s wear market size tends to
vary geographically in line with local
birth rates. Some traditional retailers in
the Children’s and Infants’ Clothing
Stores industry, such as OshKosh B’Gosh
and Gymboree, are now moving into
family clothing lines. This blurring of the
boundaries has resulted in increased
competitive intensity. Over the longer
period, social and demographic changes
will impact on children’s clothing sales
over the next five to 10 years. As with
most developed countries, more women
are delaying child bearing in exchange
for a career. Many women who decide to
have children are older and have
established careers, which often yield
higher incomes. Thus the demand for
premium priced, branded merchandise
will continue to rise pushing sales for
this product segment up. In general,
retailers of children’s and infants’
Products and services segmentation (2010)
13%
Children's wear
50%
Women's wear
37%
Men's wear
Total $84.4bn
SOURCE: WWW.IBISWORLD.COM
Family Clothing Stores in the US January 2010 15
www.ibisworld.com
Products & Markets
Products & Services
continued
clothing have responded to this trend,
with The Gymboree Corporation
introducing the Janie and Jack concept,
which offers finely crafted clothing for
new born babies whilst premium
Demand
Determinants
The demand for family clothing is
affected by a number of varying factors.
Overall, consumers’ purchasing patterns
tend to be guided by the strength and
power of recognizable brand names.
Brand perception may help some
retailers generate higher gross margins
over other competitors. Fashion trends
also influence sales, especially for
retailers such as Gap and Abercrombie &
Fitch, as do seasonal weather conditions
(unusually cold winters will see higher
sales of winter clothing than normal).
The level of consumer confidence is
related to the consumer’s perception of
the strength of the economy, so when
consumer confidence is high, demand for
clothing increases. Similarly, rises in the
level of real household disposable income
(which is affected by the level of
employment, interest rates, wage levels
and taxation) also drives demand. An
increase in the number of lower income
families may, however, push demand for
discount retail stores’ clothing, such as
TJX and Ross Stores. A rise in population
numbers will also naturally strengthen
the underlying demand for family
clothing.
Furthermore, the number of sales in a
calendar year by family clothing stores
can also impact on demand. Households
are likely to spend at stores that generate
the most savings.
Households accounted for an estimated
99.7% of the market, while the rest of the
market includes retailers, wholesalers
and other commercial buyers. In addition
to segmenting the industry in line with
relevant product segments, this industry
can also be segmented by income levels
given that price is the major basis of
competition.
Within the household segment there
are generally two markets, price sensitive
households (65% market share) and brand
sensitive households (35% market share).
In the family clothing stores industry,
the majority of stores are focused on
price competition. Some of the major
players in this industry, including Ross
Stores, TJX Companies, Stein Mart and
Goody’s, target price conscious
consumers and they offer substantial
discounts on other department stores
and specialty retailers. This has been a
growth market in recent years.
In the higher priced, brand-oriented
segment, the Gap dominates the industry
offering customers a highly recognizable
and established brand. In addition,
Abercrombie & Fitch is a trendy,
fashionable retail brand, which targets
teenagers and young professionals with
disposable income. Recently, labor
market strength and consumer optimism
has strengthened the brand sensitive
segment share.
Major Markets
products and designer wear for infant’s,
toddler’s and children has exhibited
growth, though children’s wear still
remains as the smallest portion of the
industry.
It’s
all in the name – well
known brands can heavily
influence consumer
purchases on the shop floor
Family Clothing Stores in the US January 2010 16
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Products & Markets
Major Markets
continued
Major market segmentation (2010)
35%
Brand oriented households
65%
Price sensitive households
Total $84.4bn
International Trade
Family clothing retailers supply the
domestic market. Exports and imports of
clothing are accounted for at the
manufacturing level. A detailed
discussion on the trade flows can be
found in the respective manufacturing
industries, though a summary is included
further below.
Bringing down the barriers
Between 1995 and 2004, the World
Trade Organization (WTO) upheld the
Agreement on Textiles and Clothing
(ATC) (an import quota scheme to
ensure that low wage countries with
unfulfilled export quotas were able to
specialize in the final assembly of
clothing products). On January 1, 2005,
the quota scheme expired and trade in
clothing and textiles was liberalized. The
removal of import restrictions led to
major adjustments throughout the global
supply chain of clothing and textiles,
from agriculture to manufacturing,
through to retail distribution. Until now,
global sourcing channels have been
formed on the basis of trade distorting
restrictions. Now, retail groups will have
more flexibility in sourcing products
globally from competitive suppliers. It is
SOURCE: WWW.IBISWORLD.COM
expected that China and India will
capture a large portion of the benefits of
trade liberalization in this area.
Men’s and boys’ clothing
Over recent years, China has become an
increasingly significant importer of men’s
and boy’s clothing into America. In fact
according to the International Trade
Commission, China’s share of imported
men’s clothing from total imports rose
from 6.6% in 2002 to account for 20.3%
by the end of 2008. Over this time
China’s ability to produce clothing at
significantly lower prices has helped
shape China into one of the leading
import nations. Lower prices have largely
been the result of cheap labor costs,
passed through the supply chain. China’s
dominance has really been at the expense
Mexico. For example, between 2002 and
2008 the share of men’s clothing imports
fell from 15.9% to 9.4% respectively.
Women’s and girls’ clothing
In 2008, total women’s and girls’ apparel
imports fell by 3.7% from 2007, to
$40.96 billion. Weak consumer demand
coupled with an overall down turn in the
US economy led to a reduction in
Family Clothing Stores in the US January 2010 17
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Products & Markets
International Trade
continued
imports. The top five importing nations
accounted for 60% of total imports for
women’s and girls’ apparel, with China
accounting for the single largest share of
37% in 2008. Significant growth in
Chinese imports has been as a
consequence of abolished textile quotas
coming into effect from January 1, 2005,
at which time China accounted for 27%
of total imports. Over the five years
ending in 2008, the share of imports
from China and Vietnam has increased,
at the expense of falling proportion of
imports from Mexico.
In January and February 2007, a
significant increase in textile and apparel
imports from China coupled with an
anxious US textile industry resulted in
temporary quotas limiting volume
growth on some products to 7.5% per
annum. These allowances were always
expected to be temporary in nature given
a ruling by the WTO, however in October
2005 the US and China reached an
agreement whereby quotas on 30
product categories, including lingerie
and underwear, would be limited to
growth from 8% to 10% in 2006, 13% in
Family
clothing stores only
supply the domestic market
2007 and 17% in 2008. This new
agreement came into force on January 1,
2006.
Over 2008, total exports for women’s
and girls’ apparel rose by 14% to $1.1
billion from 2007. Exports benefited
from the dollar’s fall over the year. In
2008, the top five exporting nations
accounted for nearly 70% of all women’s
and girls’ clothing, with Canada
representing the highest share of exports
at around 33% in 2008. Their high share
reflects close proximity to the US and no
trade barriers as a result of the North
American Free Trade Agreement
(NAFTA). Closely following Canada was
Mexico with a share of 20% of exports,
and the United Kingdom of around 7%.
IBISWorld analysis indicates that over
the five year period ending in 2008,
Canada and the United Kingdom have
seen a rise in its share of exports, at the
expense of falling exports from Mexico.
Family Clothing Stores in the US January 2010 18
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Products & Markets
Business Locations 2010
West
New
England
AK
0.2
wA
Rocky
Mountains
id
1.2
West nV
1.0
1.5
sd
0.2
wy
0.5
mn
0.3
0.5
or
Great
Lakes
nd
mT
1.9
Plains
1.0
UT
co
0.9
1.7
0.9
9
2.7
11.6
oK
1.4
nc
3.3
sc
Southeast
AZ
nm
1.9
0.8
Southwest
TX
8.1
Hi
0.8
1.0
ms
Al
8
0.4
Ky
Tn
Ar
7
wV VA
2.6
2.1
cA
West
oH
1.2
mo
Ks
1.8
1.6
6
3.5
in
3.5
0.6
PA
2.8
il
0.5
1 2
3
ny
6.1
5 4
mi
1.3
iA
nE
0.2
wi
mE
MidAtlantic
1.9
GA
2.0
3.4
1.3
lA
1.7
Fl
8.1
industry establishments (%)
Additional states (as marked on map)
1 VT
2 nH
3 mA
4 ri
5 cT
6 nJ
7 dE
8 md
0.3
1.2
0.6
2.9
2.5
0.4
0.4
1.8
9 dc
cold Zone (<10)
<25
<50
Hot Zone (<100)
not applicable
0.2
SOURCE: WWW.IBISWORLD.COM
Family Clothing Stores in the US January 2010 19
www.ibisworld.com
Products & Markets
West
IBISWorld estimates that in 2009, the
West region will account for 16.7% of
industry establishments, which will
represent a 0.8 percentage point increase
since 2000. Establishment share growth
can largely be attributed to above average
population growth. In 2009, the West
region will also account for 19.2% of
industry employees, 21.6% of industry
wages and 17% of the population. The
high percentage point differential
between wage share and employee share
30
20
10
Southwest
Southeast
Rocky Mountains
Plains
New England
Mid-Atlantic
0
Great Lakes
Southeast
In 2009, IBISWorld estimates that the
Southeast region will account for 28.3%
of industry establishments, which will be
2.5 percentage points higher than in
2000. The Southeast region will also
account for 24.7% of industry employees,
23.4% of industry wages and 25% of the
population. These shares indicate that
establishments within the Southeast
region will have less staff relative to the
national average. These workers will earn
lower wages than the national industry
average and there will be more
establishments per capita than the
national average. IBISWorld estimates
that 27.8% of regional industry
establishments will be located in Florida,
which will account for 26.4% of regional
employees and 24.1% of the population.
IBISWorld research shows that areas of
high population density tend to have a
high concentration of establishments on
a per capita basis. This is largely a
function of market size, which enables
smaller niche players within various
retail markets to survive.
Distribution of establishments vs. population
West
As is typical with many retail industries,
establishments are primarily
concentrated around population centers.
In 2009, the top three regions are
expected to account for approximately
60% of establishments and 58% of the
population.
Percentage
Business Locations
Establishments
Population
SOURCE: WWW.IBISWORLD.COM
signifies that on average, family clothing
store employees enjoy a remuneration
that is not only above the US average for
this industry, but also materially higher
than the second highest average industry
wage. Establishments within the West
region are also characterized by a higher
number of average employees in each
store. This can be attributed to the region
accounting for nearly half of all
establishments that have in excess of 500
employees. In 2009, California is
expected to account for 69.2% of industry
establishments and 71.8% of the
population. It is unusual for a densely
populated state such as California to have
fewer establishments than the per capita
regional or national average. This
anomaly can be attributed to California
accounting for 67.3% of all regional
establishments that have in excess of 250
employees each. The high share of larger
stores limits the need for a higher
concentration of smaller size stores.
Mid-Atlantic
In 2009, IBISWorld estimates that the
Mid-Atlantic region will account for 15%
Family Clothing Stores in the US January 2010 20
www.ibisworld.com
Products & Markets
Business Locations
continued
of industry establishments, which will be
a 0.1 percentage point lower than in
2000. The Mid-Atlantic region is also
expected to account for 17.3% of industry
employees, 18.3% of industry wages and
16% of the population. The average
number of employees per establishment
and average wage earned by each
employee will both be higher than the
national average. New York is expected to
account for 41.4% of regional
establishments, 43.3% of regional
Industry
establishments
tend to be located around
population centers
industry employees and 40.5% of the
regional population. Approximately
59.5% of employer establishments within
New York are expected to have less than
twenty employees, which will compare to
a national average of 62.1%.
www.ibisworld.com
Family Clothing Stores in the US January 2010 21
Competitive Landscape
Market Share Concentration | Key Success Factors | Cost Structure Benchmarks
Basis of Competition | Barriers to Entry | Industry Globalization
Market Share
Concentration
Level
Concentration in this
industry is Medium
Key Success Factors
IBISWorld
identifies
250 Key Success
Factors for a
business. The most
important for this
industry are:
IBISWorld estimates that in 2009, the
top four industry participants are The
TJX Companies, The Gap, Ross Stores
and Abercrombie & Fitch. These four
companies collectively account for
39.4%. The 2002 economic census
stated that the top four industry
participants accounted for 48.8% of
industry revenue indicating that
concentration within this industry has
declined. Company restructures have led
retailers to shed under performing
operating segments to further focus on
profitable area. Over 2008
concentration increased by 6.3
percentage points in growth rate from
2007. This was due to clothing retailers
winning market share over 2008,
despite a softening economic climate.
Interestingly this was at the expense of
small privately owned family clothing
retailers.
Having a clear market position
A clear market position projects a clear
and consistent company image.
fashion trends and targeted to
consumers’ tastes.
Ability to control stock on hand
Adequate stock control is in place to
reduce inventory costs and increase stock
turns.
Superior financial management
and debt management
Financial management controls are in
place to control cash flow and reduce debt.
Production of goods currently
favored by the market
Products stocked are in line with current
Cost Structure
Benchmarks
Industry profits are expects to take a hit
over 2009, accounting for 3% of total
industry revenue. This is estimated to be
down from 3.4% from the previous year.
Generally the “high volume, low margin”
strategy drives profits, however over
2009 deep discounting a practice where
retailers are slashing prices in order to
eliminate stock is hurting the stores’
bottom line.
It’s a retail thing
As is typical of the retail industry,
purchases is the largest expense item,
accounting for approximately 68.9% of
Establishment of brand names
Recognized brand names are stocked.
Attractive product presentation
Store layout and product display must
induce product purchase and reinforce
company image.
Experienced work force
The quality of staff needs to be high to
ensure excellent customer service.
industry revenue. Purchases of clothing
from overseas destinations are often a
function of exchange rate fluctuations.
With apparel prices having decreased
over the past five years, this expense has
decreased in share.
Retailing industries are also labor
intensive as wages account for a large
proportion of total sales. IBISWorld
estimates that wages will account for
around 9.8% of industry revenue in
2009, down by 1.1 percentage points
from 2008. The share of wages within
this industry is 5.6 percentage points
lower than the average for the clothing
www.ibisworld.com
Family Clothing Stores in the US January 2010 22
Competitive Landscape
Cost Structure
Benchmarks
continued
■ Profit
■ rent
■ Utilities
■ depreciation
■ other
■ wages
■ Purchases
stores sector. The variance can be
attributed to industry participants
needing to keep their overheads low and
costs down so that they can offer clothing
at lower prices relative to specialist
stores.
And the rest
Smaller expense items include rent (5%),
advertising (1.5%) and depreciation
(1.5%). Any increases in rent may tighten
purchases, and lower sales and profit
margins.
industry costs and Average sector costs
industry
costs
(2009)
5.0
3.0 1.5
0
100%
9.8
Profit
11.8
1.0
8.1 1.1
Average costs
of all industries
Profit
in sector (2009)
68.9
20.4
62.6
6.8
SOURCE: WWW.IBISWORLD.COM
indUsTry codE And TiTlE
31522
men’s & boys’ Apparel manufacturing
31523
women’s & Girls’ Apparel manufacturing
42232
men’s & boys’ Apparel wholesaling
42233
women’s, children’s & infants’ Apparel wholesaling
−
−
−
2005-2010
2011-2015
•
•
•
•
•
•
Costs for operators in the Family Clothing Stores industry are affected by the price of goods and
services from supplier industries. IBISWorld has estimated the trends of key input prices over the
previous five years and for the coming five years. is good news for this industry as IBISWorld
expects the price of key inputs to fall; shows where this industry is negatively affected as IBISWorld
expects the price of key inputs to rise; means price changes will not be a key issue for the industry.
•
-
Basis of Competition
Level & Trend
ompetition
C
in this
industry is High and
the trend is Steady
Operating in a highly competitive retail
environment, Family Clothing Stores
compete on the basis of fashion, price,
quality, brand, store service, reputation
and location.
Internal competition
Price remains a major basis of
competition for the majority of industry
participants, particularly those that
target low to middle income earners.
Retailers such as TJX and Ross Stores
target value-conscious consumers and
offer discounts of about 20% to 60% off
SOURCE: WWW.IBISWORLD.COM
department store prices. Consumers in
this market are often sensitive to price
changes, but style, range and comfort
are equally important factors. Other
retailers, such as Gap, target more
fashion conscious consumers who are
less price-sensitive. Generally, higher
prices are associated with brands that
carry positive consumer perceptions.
Purchasing decisions are not simply
based on price. Other equally important
factors that distinguish various retailers
are style, range, fit, service and various
brands. Often, retailers will target a
www.ibisworld.com
Family Clothing Stores in the US January 2010 23
Competitive Landscape
Basis of Competition
continued
particular segment, such as casual
wear, formal wear or even clothing in
bigger sizes. Given the wide variety of
factors, and range of market and
product segments, retailers can
differentiate themselves from other
competing stores within proximity.
Family clothing stores typically
compete with similar stores that are
located within their prime market area.
Consumers will favor stores that are
located closer to their homes and
generally shop further when seeking a
special item or brand.
External competition
Family clothing retailers’ major
external competitors are the Men’s
Barriers to Entry
Level & Trend
arriers to Entry
B
in this industry are
Medium and Steady
The high costs involved in developing
and maintaining brand reputations
provide a major barrier to entry in this
industry. As existing players have
already established brand names in
respective product offerings, new
entrants will have to invest money and
time before consumers shift away from
strong brand names and purchase
relatively new brands.
Due to recent economic slowdowns,
consumer demand has shifted towards
more competitively priced clothing.
Family clothing stores have catered to
these demands by providing branded
merchandise at discounted prices.
Existing stores, such as TJX and Ross
Stores, are able to offer merchandise at
discounted prices by purchasing
products earlier in the season at low
prices through established sourcing
networks. New entrants do not have
access to these established networks so
Prices,
brands and location
are prime competitive
factors in this highly
fragmented industry
Clothing Stores, the Women’s Clothing
Stores, the Children’s and Infants’
Clothing Stores and the Department
Stores industries, specialty and
discount store chains, independent
retail stores, and internet businesses
that market similar lines of
merchandise. External players compete
on the range and style of clothing,
quality and location.
barriers to Entry checklist
Competition
Concentration
Life Cycle Stage
Investment Requirements
Technology Change
Regulation & Policy
Industry Assistance
level
High
Medium
Mature
Medium
Low
Medium
Low
SOURCE: WWW.IBISWORLD.COM
selling merchandise at discounted
prices may decrease profit margins.
As one of the conditions of sourcing
clothing at low costs is the early
purchase of merchandise, retailers rely
heavily on their expertise and judgment
of fashion trends. New entrants may
not acquire this expertise and may have
to work on a trial and error basis,
which may increase their risks of
failing.
www.ibisworld.com
Family Clothing Stores in the US January 2010 Competitive Landscape
Industry
Globalization
Level & Trend
lobalization
G
in this
industry is Low and
the trend is Steady
This industry is made up of a large
number of small, local companies and the
major companies in this industry are
domestically owned. Gap, however,
generates about 12% of total revenue
from international markets and TJX
stores generate about 15% of total
revenue from international markets.
24
Family Clothing Stores in the US January 2010 25
www.ibisworld.com
Major Companies
The Gap, Inc. | The TJX Companies, Inc.
Ross Stores, Inc. | Other
Major players
The TJX Companies, Inc. 13.4%
(Market share)
64.7%
Other
Ross Stores, Inc. 6.9%
Player Performance
The Gap, Inc.
Market share: 15.0%
Industry Brand Names
GapKids
babyGap
GapBody
Banana Republic
Old Navy
The Gap, Inc. 15.0%
Famous for its casual wear, The Gap is
one of America’s most recognized brands
and retails a range of jeans, t-shirts and
Khakis over 3,000 stores in the US, the
United Kingdom, Canada, France, Japan
and Ireland. Built on its iconic basics
brand, the company has expanded to
include urban hip brands like Banana
Republic and Old Navy. The Gap brands
include Gap, GapKids, babyGap,
GapBody and Gap Outlet. As an
international company, with operations
in the UK, Canada, Japan, France and
Germany, an overwhelming majority of
sales are domestically generated.
Despite the purchase of a women’s
sports and active apparel companyAtlanta in late 2008, sales remained
slow, especially after three consecutive
years of slumping sales. Analysis
indicates that fiscal 2009 will also be
poor with further falls in sales and
earnings. Falling earnings will reflect on
a decline on interest income and
operating gross margins.
A bit of a history
Gap was founded in 1969 by Donald and
Doris Fisher as a single store. The
company expanded into California and
went public in 1976. Initially, the target
market for Gap was teenagers and the
main product was Levi’s jeans. In 1983,
the company changed its focus to
concentrate on brightly colored cotton
clothing and consolidated the many
private labels into the Gap brand.
Throughout the 1980s and 1990s, the
SOURCE: WWW.IBISWORLD.COM
company slowly expanded its product
range to include all aspects of family
clothing. The introduction of GapKids in
1986 and babyGap in 1989 allowed the
store to enter the newborn, children and
teen segments of the market. The
acquisition of two Banana Republic
stores in 1983 allowed the company to
enter the higher priced clothing segment
of the market. The Gap’s acquisition of
Old Navy in 1994 was aimed at the lower
priced family apparel segments. The
result of this expansion meant that the
company operated in both these
segments, as well as in the areas of family
apparel and accessories. In 1998,
GapBody was launched and in 2004, Gap
sold its 10 stores in Germany to Swedish
retailer H&M.
In August 2005, The Gap introduced
its first new store concept in more than a
decade. Forth & Towne is a women’s
clothing retailer that is aimed at the over
35 years of age demographic. Research
indicated that Gap’s share of this
demographic was low and given the
higher incomes earned by this group. It
was one that could not be ignored. Stores
have opened in the eastern states which
provide an ‘experience’ and higher levels
of customer service. Keeping up with
trends has been important for this
retailer, which is why in the following
year it established an online footwear
business. In 2007, The Gap closed down
Forth & Towne, the company’s most
recent new concept store.
Family Clothing Stores in the US January 2010 26
www.ibisworld.com
Major Companies
Player Performance
continued
Financial performance
Deteriorating economic conditions over
2008 had an adverse impact consolidated
sales, which fell by 7.8% over fiscal 2009.
Despite this the company was on track to
generate a net income gain of $967
million, up by $134 million for the year.
The fall in sales was attributed to the
closure of 56 unprofitable stores as well
as a 12% drop in comparable store sales.
A reduction in clothing sales was
particularly felt in the company’s third
and fourth reporting quarter.
Over fiscal 2008 consolidated sales
have taken a hit, falling by 1.1% to $15.8
billion, while net earnings were slightly
higher at $833 million from 2007. Total
sales increase is somewhat misleading as
it takes into account the impact of new
store openings and additional operations.
Excluding the effect of these, same store
sales were down by 4% for the year, and
by 7% the previous year. In fact the 24%
online sales rise had a large impact on
consolidated sales. A slightly higher then
expected earnings gain was attributed to
the company’s efforts of reducing
operating costs by discontinuing
operation of Forth & Towne.
Revenue over fiscal 2007 was 0.5%
lower and the second consecutive year
that total revenue exhibited a decline.
Revenue declined despite an increase in
total store numbers. Demand in all key
divisions was weak at best, with
comparable store sales declining in Gap
North America (down 7%), Old Navy
North America (down 8%) and
International (down 8%). Banana
Republic exhibited flat comparable store
sales during the year. Weak comparable
store sales were blamed on a poor
assortment of products. Despite a decline
in revenue, operating expenses and the
cost of goods sold increased year on year,
which resulted in net income falling by
30.1%, to $778 million.
In fiscal 2006, revenue fell by 1.5%.
The rise in consolidated revenue was
largely attributed to incremental
increases associated with new store
growth of 2%, while comparable store
sales fell by 5%. This suggested that
existing Gap stores were under
performing. North American sales
revenue fell by 1.4%, with North
American Gap revenue falling by 5.9% to
$5.41 billion. Consolidated gross margin
fell by 2.6 percentage points, to 36.6%
and operating earnings were 10.9% of
revenue. Total net earnings were $1.11
billion, which was 3.2% lower than the
previous year.
The Gap – financial performance
year
revenue
($ million)
(% change)
net income
($ million)
Employees
2004
15,854
n/C
1,031
153,000
2005
16,267
2.6
1,150
152,000
2006
16,023
-1.5
1,113
153,000
2007
15,943
-0.5
778
154,000
2008
15,763
-1.1
833
150,000
2009
14,526
-7.8
967
134,000
SOURCE: HOOVERS.COM
Family Clothing Stores in the US January 2010 27
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Major Companies
Player Performance
The TJX Companies,
Inc.
Market share: 13.4%
Industry Brand Names
T. J. Maxx
Marshalls
A. J. Wright
Bob’s Stores
The TJX Companies, Inc. (TJX) is the
leading off-price retailer of apparel and
home fashions in the US through T.J.
Maxx stores, Marshalls stores and A.J.
Wright stores. The family apparel and
accessories retailer sells merchandise via
821 or so stores throughout the US. TJX
also has international operations with
HomeSense and Winners Apparel stores
in Canada, and T.K. Maxx stores in the
UK and Ireland. The retailer target
middle to higher income earning families,
as well as fashion conscious women
between the ages of 25 and 54.
A bit of history
TJX has its origins in the opening of the
Zayre store in Massachusetts in 1956.
Zayre purchased the Hit or Miss chain in
1969, which sold upscale women’s
clothing at discounted prices. In 1977, the
company expanded its off-price retail
strategy to include family clothing
through the T.J. Maxx stores. In 1987,
TJX was established to maintain the
Zayre stores and the general merchandise
stores. TJX acquired Winners Apparel,
the Canadian apparel chain, in 1990 and
opened HomeGoods gift and houseware
outlets in 1992. In 1994, the company
opened T.K. Maxx stores in the UK. In
1995, TJX acquired Marshalls clothing
chain and sold its Hit or Miss apparel
chain. In late 2003, TJX acquired Bob’s
Stores retail clothing chain, which as at
January 2007 had 36 stores operating in
the US. Approximately 80.2% of sales
were derived in the US during fiscal
2006.
Financial performance
Consolidated sales revenue is estimated
to grow at a slower pace over fiscal 2009,
by 5.2 percentage points lower in growth
rate while the company generated a net
gain of $880.6 significantly higher for the
year compared to 2007. Sales grew due to
a 1% increase in comparable stores sales,
an important retail measure that takes
out the effect of new store openings.
Earnings were 14.1% higher for the year
due to an increase in merchandise
margins by 0.3 percentage points.
Since 2005, the company appears to
have lost steam with revenue growth
slowing. In 2008, revenue fell by 2
percentage points while the company
generated $33.8 million less income. Part
of the revenue rise was due to organic
growth associated with growth over the
number of stores in operation and growth
in selling square footage by 4%. Overall
transaction volume was slightly down
due to soft retail trading, but this was
offset by an increase in the average ticket.
Double digit company growth in 2004
was due to a store expansion, which
pushed staff numbers to 105,000. Gross
TJX companies – financial performance
year
revenue
($ million)
(% change)
net income
($ million)
Employees
2004
13,327.9
11.2
658.4
105,000
2005
14,913.5
11.9
664.1
113,500
2006
15,955.9
7.0
690.4
119,000
2007
17,404.6
9.1
738.0
125,000
2008
18,647.1
7.1
771.8
129,000
2009
18,999.5
1.9
880.6
133,000
SOURCE: HOOVERS.COM
Family Clothing Stores in the US January 2010 28
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Major Companies
Player Performance
continued
margin improved by 0.2 percentage point
while net income growth of 13.8% helped
to increase net income margin by a
further 0.1 percentage point. Growth in
2005 was largely due to the acquisition
of Bob’s Stores while 1.0 percentage
point of growth was lost given the 53
week year in fiscal 2005 compared with
52 in fiscal 2004. Gross margin
deteriorated by 0.7 percentage points,
while selling, general and administrative
expenses increased by 0.1 percentage
point, to 16.3%. Cost pressures limited
net income growth to 0.9%, which
lowered net income margin by 0.4
percentage points.
Player Performance
Ross Stores operates a chain of discount
retail apparel for men, women and
children, which targets value-conscious
consumers between the ages of 25 and
54, primarily in middle-income
households. The company offers brand
name and designer merchandise at every
day low prices, generally between 20% to
60% below regular department store and
other retail outlet prices. The company
reduces production costs by offering
minimal levels of customer service and a
no-frills shopping environment, in over
900 stores in 27 states. Outlets also offer
home wares, furnishings, toys and games,
however apparel accounts for around
60% of total revenue. Contrary to an
economic recession, the company added
around 160 stores in 2008 and 2007 as
well as doubling the number of dd’s
DISCOUNT locations it operates.
company posted an $11 million profit and
by 1989 it had more than 150 stores.
In the early 1990s, the company
continued to open stores and there were
290 stores by the end of 1995. In 1998,
the company added fine jewelry,
maternity wear, sporting goods, small
furnishings and educational toys to its
product offerings. In 2001, the company
entered new markets in Georgia, North
Carolina, South Carolina, Montana and
Wyoming, and in 2002, stores were
opened in Louisiana and Tennessee.
In August 2004, the company opened
its first three dd’s DISCOUNTS stores in
Vallejo, San Leandro, and Fresno, CA. In
the following year it opened 10 dd’s
DISCOUNTS stores and about 75 Ross
stores.
Ross Stores, Inc.
Market share: 6.9%
Industry Brand Names
Ross Stores
dd’s DISCOUNTS
Taking a step back
Ross Stores, Inc. began in 1982 with six
stores in the San Francisco Bay Area.
Throughout the 1980s and 1990s, the
company continuously expanded
throughout the US after it went public in
1985. In 1987, the company underwent
an overhaul with changes to its
management, market expansion strategy
and merchandise line, and decided to
focus its expansion efforts on three
markets, the West Coast, the Washington
DC area and Florida. On the merchandise
side, house wares were dropped and
cosmetics, fragrances and high-end
clothing were added. In 1987, the
Financial performance
Consolidated sales revenue over fiscal
2009 strengthened rising by an
additional 1.3 percentage points in
growth rate. Despite deteriorating
economic conditions the company
managed to out perform the most
clothing retail stores. The rise in sales
was not only attributed to incremental
increases associated with the opening of
66 additional retail outlets but also a 2%
rise in comparable store sales. Over the
recession Ross stores have benefited from
the strategic decision to expand its
discount outlets. Dress for Less and dd’s
DISCOUNT stores sell men’s, women’s
and children’s clothing at prices well
below that of department stores and
Family Clothing Stores in the US January 2010 29
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Major Companies
Player Performance
continued
specialty family clothing outlets. This also
helped the company generate a net gain
of $305.4 million over 2008.
After enjoying double digit growth in
fiscal 2006 and 2007, revenue growth
over fiscal 2008 was substantially softer,
falling by 5.4 percentage points.
Furthermore, the company generated a
net gain of $261 million, which was
largely assisted by an increase in the net
profit margin. Comparable store sales
grew by 1%, suggesting the somewhat
resilient nature of the company operating
in a challenging trading climate. Net
earnings as a percentage of total sales
were higher for the year, due to lower
costs of goods sold as a share of sales.
Double-digit sales growth over 2007,
was attributed to a net increase in store
numbers by 63, to 797, and comparable
store sales growth of 4%. Sales per selling
square feet increased marginally to $305
million while gross margins increased by
0.4 percentage points, to 22.5%. Selling,
general and administrative expenses
accounted for 15.5% of revenue, which
was the same as in fiscal 2006. The
increase in gross margin contributed to a
21% increase in net income to $241.6
million, which represented a net income
margin of 4.3%. Comparable store sales
were also strong in 2006, which
suggested that operating stores were
performing well, while a net income loss
of $169.9 million in 2005 was attributed
to higher costs.
ross stores – financial performance
year
revenue
($ million)
(% change)
net income
($ million)
Employees
2004
3,920.6
11.0
228.1
26,600
2005
4,240.0
8.1
169.9
30,100
2006
4,944.2
16.6
199.6
33,200
2007
5,570.2
12.7
241.6
35,800
2008
5,975.2
7.3
261.0
39,100
2009
6,486.1
8.6
305.4
40,000
SOURCE: HOOVERS.COM
Other Companies
The Family Clothing Store industry is
highly fragmented and is dominated by a
large number of small retailers, each with
a low market share of the total industry.
The top four players in this industry are
Gap, Ross Stores, TJX Companies and
Abercrombie & Fitch. Together, these
four companies collectively accounted for
around 39.4% of concentration in 2009.
Concentration will remain flat from
2008.
Feeling the economic downturn
Accounting for a market share of around
4.1% in 2009, Abercrombie & Fitch
(A&F) is a specialty retailer, selling
upscale casual apparel for men, women
and children. The company also retails
personal care products and other
accessories under the Abercrombie &
Fitch, Abercrombie and Hollister brands.
The A&F brand targets college students,
the Hollister brand targets teens and the
Abercrombie brand is for children. In
Family Clothing Stores in the US January 2010 30
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Major Companies
Other Companies
continued
early 2008, the company launched its
newest brand, Gilly Hicks with the
opening of a store in Massachusetts. The
outlet specializes in women’s bra,
underwear and personal care products.
There are plans to open three dozen more
stores by 2010.
Despite expansion programs in new
brands and stores, consolidated sales
failed to impress with revenue down for
5.6% over fiscal 2009. The company’s net
earnings lost nearly half the value that it
generated the previous fiscal period,
generating only $272.3 million. Gross
profit was down for the year, while total
store distribution, marketing, general
and administrative expenses increased.
The years performance was associated
with a severe reduction in household
spending for family clothing stores as the
detrimental affects of the recession
accelerate. A stark contrast to double
digit sales growth from 2005 to the end
of fiscal 2008.
Modest retailer
Stein Mart is a retailer of moderate-todesigner brand-name apparel for women,
men and young children, as well as
accessories, gifts, linens and shoes. The
company is a hybrid between an upscale
department/specialty store and a
traditional off-price retailer. The
company offers current season, brandname fashion merchandise at prices that
are 25% to 60% below those charged by
department and specialty stores. Stein
Mart’s target customer is the 35-60 year
old female who typically occupies a
household with above average income
and is well educated. Private label
merchandise makes up less than 10% of
all products. Stores are located in
neighborhood shopping centers in
wealthier residential areas. In October
2006, Stein Mart ceased selling children’s
apparel, with the available square footage
passed on to ladies ready-to-wear
apparel.
Founded in the early 1900s, the
company has evolved into a national
chain that operates around 280 shops in
some 30 states. Consolidated revenue for
fiscal 2008 was down by 2.9%, while the
company generated a net loss of $4.53
billion. Much of the decline was
attributed to the weak retail
environment, which resulted in a 4%
drop in comparable store sales. Efforts to
generate positive returns, by closing
unprofitable and underperforming stores
over the year, were not successful.
Furthermore, the company’s loss was
exacerbated by increased mark downs.
Filing for Chapter 11
bankruptcy protection
Feeling the brunt of the recession,
Goody’s Family Clothing, Inc., filed for
bankruptcy protection but with no life
Abercrombie & Fitch – financial performance
year
revenue
($ million)
(% change)
net income
($ million)
2004
2005
2006
2007
2008
2009
1,707.8
2,021.3
2,784.7
3,318.2
3,749.9
3,540.3
7.0
18.4
37.8
19.2
13.0
-5.6
204.8
216.4
334.0
422.2
475.7
272.3
SOURCE: HOOVERS.COM
Family Clothing Stores in the US January 2010 31
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Major Companies
Other Companies
continued
lines left, the company began to liquidate
in 2009. Prior to the liquidation, the
company won approval to restructure. As
part of the reorganization the chain
closed more then 70 under performing
stores, as well as consolidating its
distribution operations. Prior to
liquidation, IBISWorld estimated the
Goody’s Family Clothing chain to have a
1.5% concentration within the industry.
Family Clothing Stores in the US January 2010 32
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Operating Conditions
Structural Risk Index | Investment Requirements | Technology & Systems
Industry Volatility | Regulation & Policy | Industry Assistance | Taxation Issues
Barriers to Entry
52.4
Score
Le
ve
ls o
f As
sistance
s
ort
Imp
IBISWorld has scored key elements of
industry structure on a scale of 1 to 9 –
the higher the figure, the greater the risks
to businesses operating in the industry.
Operating conditions in the Family
Clothing Stores industry are less risky
C
ge
Sta
ge
Sta
Le
ve
ls o
f As
sistance
ity
til
Expor
ts
Score
Life Cycle
47.6
Reve
nu
eV
ola
C
on
titi
pe
om
ity
til
Barriers to Entry
Expor
ts
Life Cycle
Industry Pressure Points
Competition
Levels of Assistance
Retail Trade
on
titi
pe
om
Industry Relax Points
Exports
Imports
Revenue Volatility
Family Clothing Stores
Reve
nu
eV
ola
Structural Risk
Index
s
ort
Imp
than in other industries in the Retail
Trade division. The industry structural
risk index totals 47.6 points compared to
52.4 points for the Retail Trade division
as a whole (100 points equates to
extremely poor operating conditions).
SOURCE: WWW.IBISWORLD.COM
Investment
Requirements
Level
The level
of
investment required
is Medium
Generally, retailing industries are labor
intensive as industry participants are
subjected to higher labor costs than
capital costs. A large proportion of
workers are employed on a casual and
part-time basis according to seasonality.
Labor costs are incurred through
customer service, re-stocking shelves,
maintaining inventory levels and
management. Capital expenditure is
mainly for shelving and display items,
and for electronic bar-coding systems
and surveillance. To overcome theft and
other losses, retailers invest in a
significant level of surveillance and stock
control equipment.
Capital intensity
Capital units per labor unit
1.0
0.8
0.6
0.4
0.2
0.0
Economy
Retail Trade
Family Clothing
Stores
Dotted line shows a high level of capital intensity
SOURCE: WWW.IBISWORLD.COM
Family Clothing Stores in the US January 2010 33
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Operating Conditions
Investment
Requirements
continued
Tools of the Trade: Growth strategies for success
investment Economy
recreation, Personal services,
Health and Education. Firms
benefit from personal wealth so
stable macroeconomic conditions
are imperative. Brand awareness
and niche labor skills are key to
product differentiation.
information, communications,
mining, Finance and real
Estate. To increase revenue
firms need superior debt
management, a stable
macroeconomic environment
and a sound investment plan.
children’s & infants’ clothing stores
Traditional service Family
Economy clothing
wholesale and retail. Reliant
on labor rather than capital to
sell goods. Functions cannot
be outsourced therefore firms
must use new technology
or improve staff training to
increase revenue growth.
stores
women’s clothing stores
men’s clothing stores
women’s & Girls’ Apparel manufacturing
men’s & boys’ Apparel manufacturing
change in share of the Economy
Technology
& Systems
Level
The level
of
Technology
Change is Low
capital intensive
labor intensive
new Age Economy
Technological advances include the use
of electronic barcode scanners,
automated warehouse equipment and
electronic surveillance. Electronic
barcode scanning systems enable
efficient customer check-out and returns,
store-based inventory management and
rapid order replenishment. For instance,
The TJX Companies uses specialized
computer inventory planning,
purchasing and monitoring systems to
price and determine inventory levels.
This is all done centrally using satellite
old Economy
Agriculture and manufacturing.
Traded goods can be produced
using cheap labor abroad.
To expand firms must merge
or acquire others to exploit
economies of scale, or specialize
in niche, high-value products.
SOURCE: WWW.IBISWORLD.COM
transmitted information.
With losses incurred as a result of
theft, retailers are needing to use security
and loss prevention systems such as,
closed circuit TV cameras, source
tagging, signature-capture technology
(this is used at the point of sale terminal
for credit card transactions) and
fingerprint scanning systems that verify
customer identity (to combat check
fraud).
Abercrombie & Fitch have upgraded
their systems to help them allocate, plan
Family Clothing Stores in the US January 2010 34
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Operating Conditions
Revenue Volatility
Level
The level
of
Volatility is Low
and source merchandise. Increasing
efficiencies in this way, results in gross
margin gains.
Radio Frequency Identification
(RFID) technology is being introduced to
make existing supply chain processes
more efficient. Products are ‘tagged’ with
chips that ‘announce’ their identity when
hit with a non-line-of-sight
electromagnetic field. This assists with
forecasting demand and managing
inventory levels. RFID technology also
provides a variety of possible benefits to
consumers. These include faster
recovery of stolen items, consumer
savings stemming from reduced
operating costs, and faster, more reliable
product recalls.
Some major players are using labor
management systems to make better use
of their employees. For instance, Ross
Stores has a labor management system
that tracks in store labor against budget
and forecasts to determine if resources
are being allocated correctly and if
adjustments need to be made.
In the past few years, retail spending
has been sustained through tax cuts
and low interest rates. In recent
years, the discount or off-price
segment of this industry has
expanded, thereby lowering revenue
growth. Also steady growth in the
general population and positive real
GDP growth over the current
performance period are also factors
that may contribute to the low level of
volatility.
A higher level of revenue
volatility implies greater
industry risk. Volatility can
negatively affect long-term
strategic decisions, such as
the time frame for capital
investment.
When a firm makes poor
investment decisions it
may face underutilized
capacity if demand
suddenly falls, or capacity
constraints if it rises
quickly.
Technology
is mostly
concerned with inventory
management and
electronic surveillance
Volatility vs Growth
1000
revenue volatility* (%)
Technology
& Systems
continued
Hazardous
rollercoaster
100
10
Family clothing stores
1
0.1
stagnant
–30
–10
blue chip
10
30
50
70
Five year annualized revenue growth (%)
* Axis is in logarithmic scale
SOURCE: WWW.IBISWORLD.COM
Family Clothing Stores in the US January 2010 35
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Operating Conditions
Regulation & Policy
Level & Trend
he level of
T
Regulation is
Medium and the
trend is Steady
Regulations relevant to this industry are
generally covered by each US state.
Congress and/or a state enact trade
regulations to maintain a free and
competitive economy. Congress has
passed the Sherman Antitrust Act, the
Wilson Tariff Act, the Clayton Antitrust
Act and the Robinson-Patman Act along
with various other regulations regarding
unfair competition. Today the Sherman
Act together with the Clayton Act, as
amended by the Robinson Act, and
section 73 of the Wilson Tariff Act,
constitute the Federal Antitrust law of the
United States. In addition to this, states
have enacted their own antitrust laws to
ensure that the general pubic are
provided with best price, quality and
competition among businesses. A brief
description of each follows:
The Sherman Antitrust Act: In the late
1800s, businesses began to gain market
dominance by forming antitrust
competitive agreements. These
relationships were called trusts. Trusts
cut prices drastically in order to drive
competitors out of business. The
anticompetitive techniques of trusts
included buying out competitors, forcing
customers to sign long term contracts
and forcing customers to buy unwanted
products in order to receive other goods.
Congress responded by introducing the
Sherman Antitrust Act in 1890. The Act
prohibits illegal monopolies or
monopolies that could be shown to be
using their power to censor competition.
An example of its application occurred in
the early 1900s with the break up of two
such monopolies, the Standard Oil Co.
and the American Tobacco Co.
The Wilson Tariff Act: Enacted in
1895, The Wilson Tariff Act prohibits
conspiracies that restrain import trade.
The Clayton Antitrust Act: In 1914,
Congress passed two laws which further
protected the competitive market place.
The Clayton Antitrust Act banned: trusts
formed by two companies with
interlinking boards of directors; fixed
prices in agreements with other
businesses offering competing products;
agreements formed with other businesses
to control the supply and price of
products; and abuse of power to gain or
maintain a monopoly.
The Robinson-Patman Act: In 1914
section 2 of the Clayton Act became the
first federal statute that expressly
prohibited certain forms of price
discrimination. In 1936, section 2 of the
Clayton Act was amended to create the
Robinson-Patman Act whose major
legislative purpose was to provide some
measure of protection to small
independent retailers and their
independent suppliers from what was
thought to be unfair competition from
vertically integrated, multi-location chain
stores. The Act requires sellers to sell to
everyone at the same price, while buyers
are to purchase merchandise from a
particular seller at the same price as
everyone else. The Act prohibits sellers
and buyers from using brokerage,
allowances and services.
Family Clothing Stores in the US January 2010 36
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Operating Conditions
Industry Assistance
Level & Trend
he level of
T
Industry Assistance
is Low and the
trend is Steady
Taxation Issues
Level
The level
of Tax
Burden is Medium
This industry does not receive any major
government subsidies or grants, and
tariffs do not apply.
The National Retail Federation is the
world’s largest retail trade association
and conducts programs and services in
research, education, training,
information technology and government
affairs to protect and advance the
interests of the retail industry.
The American Apparel and Footwear
Association (AAFA) is the national trade
association representing apparel,
footwear and other sewn product
companies. The AAFA’s mission is to
promote and enhance its members’
competitiveness, productivity and
profitability in the global market by
minimizing regulatory, legal, commercial,
political and trade restraints.
The Electronic Retailing Association is
the trade association for companies who
sell electronic goods and services to the
public. The purpose of the ERA is to
foster the growth, development and
acceptance of the rapidly growing
electronic retailing industry worldwide.
The Retail Optimization Council is an
industry organization designed to help
retailers and vendors jointly understand
and implement optimization solutions,
mainly through the development of open
integration requirements, educational
programs and research. The Council’s
mission is to increase growth and
profitability for the retail industry
through the optimization of the
demand chain.
The two types of taxes applicable to this
industry are sales tax and use tax. The US
does not impose a national sales and use
tax, but rather the rate varies between
states. Sales tax is applicable to the retail
sales of tangible property while use tax is
applicable to the purchase of an item for
use in a state from an out of state retailer.
In addition to the sales and use tax, local
jurisdictions in each state are also
empowered to apply their own local sales
and use tax.
As of 2008, there was no state tax
imposed on goods sold in the state of
Alaska. However, the tax rates in
remaining states vary from 2.90% in
Colorado (the lowest) to 7.25% in
California (the highest). Mississippi,
Rhode Island, New Jersey, Indiana and
Tennessee account for the second highest
states tax of 7.0%. In addition, products
may be subject to local jurisdiction taxes
that can range from 0.0% to as high as
7.0%.
Assistance
stems from
industry bodies and
associations
Family Clothing Stores in the US January 2010 37
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Key Statistics
Industry Data
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Sector Rank
Economy Rank
Revenue
($m)
73,765
77,478
79,344
82,480
85,924
88,154
89,256
86,410
83,950
84,400
86,250
88,500
90,900
93,400
96,200
13/66
104/760
Annual Change
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Sector Rank
Economy Rank
Revenue
(%)
5.0
2.4
4.0
4.2
2.6
1.3
-3.2
-2.8
0.5
2.2
2.6
2.7
2.8
3.0
39/66
462/759
Industry
Value Added
($m)
11,481
12,174
13,011
13,106
13,649
14,208
14,999
12,584
12,280
13,166
13,688
14,045
14,671
15,075
15,786
14/66
213/760
Establishments
31,331
32,982
34,196
34,344
35,086
35,929
36,595
34,564
32,741
33,760
35,362
36,285
38,178
39,228
41,366
27/66
160/727
Enterprises Employment
17,147
479,506
18,110
484,019
17,937
567,454
17,936
599,691
18,253
622,617
18,398
660,693
18,664
669,691
17,628
629,067
16,063
589,329
16,880
607,680
17,328
636,525
17,780
653,130
18,325
687,204
18,829
706,104
19,856
744,588
36/66
8/66
197/713
62/741
Exports
---------------N/A
N/A
Industry
Value Added
(%)
6.0
6.9
0.7
4.1
4.1
5.6
-16.1
-2.4
7.2
4.0
2.6
4.5
2.8
4.7
14/66
93/760
Establishments
(%)
5.3
3.7
0.4
2.2
2.4
1.9
-5.5
-5.3
3.1
4.7
2.6
5.2
2.8
5.5
6/66
40/727
Enterprises Employment
(%)
(%)
5.6
0.9
-1.0
17.2
0.0
5.7
1.8
3.8
0.8
6.1
1.4
1.4
-5.6
-6.1
-8.9
-6.3
5.1
3.1
2.7
4.7
2.6
2.6
3.1
5.2
2.8
2.8
5.5
5.5
2/66
7/66
16/713
65/741
Exports
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Key Ratios
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Sector Rank
Economy Rank
IVA/Revenue
($)
0.16
0.16
0.16
0.16
0.16
0.16
0.17
0.15
0.15
0.16
0.16
0.16
0.16
0.16
0.16
47/66
674/760
Imports/Demand Exports/Revenue
(%)
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Figures are inflation-adjusted 2010 dollars. Rank refers to 2010 data.
Revenue per
Employee
($’000)
153.84
160.07
139.82
137.54
138.00
133.43
133.28
137.36
142.45
138.89
135.50
135.50
132.28
132.28
129.20
44/66
502/741
Wages/Revenue
(%)
10.86
11.11
11.60
11.09
11.09
11.32
12.00
10.92
9.83
10.80
11.07
11.07
11.34
11.34
11.61
44/66
530/721
Imports
---------------N/A
N/A
Wages
($m)
8,014
8,610
9,203
9,147
9,525
9,977
10,715
9,436
8,251
9,115
9,548
9,797
10,308
10,592
11,169
11/66
144/721
Domestic
Demand
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Quantity
of Clothing
(Thousands)
471,357
496,636
510,182
531,993
555,930
573,000
583,737
582,482
543,650
547,104
559,764
574,434
590,464
606,540
623,984
N/A
N/A
Imports
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Wages
(%)
7.4
6.9
-0.6
4.1
4.7
7.4
-11.9
-12.6
10.5
4.8
2.6
5.2
2.8
5.4
3/66
13/721
Domestic
Demand
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Quantity of
Clothing
(%)
5.4
2.7
4.3
4.5
3.1
1.9
-0.2
-6.7
0.6
2.3
2.6
2.8
2.7
2.9
N/A
N/A
Employees
per Est.
15.30
14.68
16.59
17.46
17.75
18.39
18.30
18.20
18.00
18.00
18.00
18.00
18.00
18.00
18.00
7/66
302/727
Average Wage
($)
16,713.03
17,788.56
16,218.05
15,252.86
15,298.33
15,100.81
15,999.92
14,999.99
14,000.67
14,999.67
15,000.20
15,000.08
14,999.91
15,000.62
15,000.24
60/66
678/721
Share of the
Economy
(%)
0.10
0.11
0.11
0.11
0.11
0.11
0.11
0.09
0.09
0.10
0.10
0.10
0.10
0.10
0.10
14/66
213/760
SOURCE: WWW.IBISWORLD.COM
Family Clothing Stores in the US January 2010 38
www.ibisworld.com
Key Statistics
Historical
Performance
In the late 1990s, the overall retail
industry in America enjoyed a period of
strong growth, supported by
strengthened consumer confidence, low
interest rates and low unemployment
levels. The economic slowdown that
began in 2001 had created one of the
worst years for US retailers in a decade.
Consumers were unwilling to spend,
except to purchase necessities. The weak
labor market, the war with Iraq and
stock market instability were factors that
negated improved consumer spending
within the retail sector. Participants
within the family clothing store industry
experienced reductions in their sales.
Net earnings for The Gap Inc. decreased
for two consecutive years. This led
industry participants to focus on cost
control and inventory management. In
2001, technology companies continued
to lose favor and traditional retailers
became the dominant online retailers.
Multi-channel retailing, serving
customers by bricks and clicks,
continued to be the trend. However,
higher unemployment rates meant that
retail sales in all channels were hard
pressed to find the healthy increases in
2001 that were achieved in prior years.
Weaker retail conditions prompted the
Federal Reserve to decrease interest
rates, but relaxing monetary policy tends
to lag the economic cycle and the positive
affects only began to become evident
towards the end of 2003.
The Family Clothing Store industry in
During
the early to
mid‑1990s, the industry
was the largest in the
clothing retail sector
the US experienced growth throughout
the first half of the 1990s, and continued
to be the largest sector in clothing retail.
In 1995, it accounted for approximately
44% of the total clothing retail division
in the United States.
Over the past ten years, chain store
outlets and franchises have increased
while the number of small independent
operators has declined, primarily due to
increased price competition. Chains and
franchised groups have the advantage of
group buying power, advertising and
superior management and financial
control systems.
The shift away from tailored clothing
throughout the early half of the 1990s
assisted family clothing stores as
consumers found the large collection of
clothing and one-stop shop nature for
the whole family, convenient and
attractive.
Statistics from the US Census Bureau
reveal that industry revenue increased at
a rate of 6.5% per annum from 1992 to
1995. The number of establishments and
enterprises increased significantly as
businesses expanded outlet stores in
existing and new markets.
Family Clothing Stores in the US January 2010 39
www.ibisworld.com
Jargon & Glossary
Industry Jargon
IBISWorld Glossary
COMPARABLE STORE SALES Same store sales is a retail
measure determining what portion of new sales comes
from genuine sales growth and what portion from the
opening of new stores.
POINT-OF-SALE (POS) Systems used at checkout points
at retail stores to capture data at the time and place of
sale. POS systems use computers and cash registers and
more to instantly capture the transaction.
BUSINESS TO CUSTOMER (B2C) Transactions that
take place between a business and a customer.
RADIO FREQUENCY IDENTIFICATION (RFID) The
technology is most commonly in the forms of tags that
are attached to garments. Using these tags helps stores
with inventory controls.
BARRIERS TO ENTRY Barriers to entry can be High,
Medium or Low. High means new companies struggle to
enter an industry, while Low means it is easy for a firm
to enter an industry.
INDUSTRY REVENUE The total sales revenue of the
industry, including sales (exclusive of excise and sales
tax) of goods and services; plus transfers to other firms
of the same business; plus subsidies on production; plus
all other operating income from outside the firm (such
as commission income, repair and service income, and
rent, leasing and hiring income); plus capital work done
by rental or lease. Receipts from interest royalties,
dividends and the sale of fixed tangible assets are
excluded.
CAPITAL/LABOR INTENSITY An indicator of how much
capital is used in production as opposed to labor. Level is
stated as High, Medium or Low. High is a ratio of less
than $3 of wage costs for every $1 of depreciation;
Medium is $3 – $8 of wage costs to $1 of depreciation;
Low is greater than $8 of wage costs for every $1 of
depreciation.
DOMESTIC DEMAND The use of goods and services
within the US; the sum of imports and domestic
production minus exports.
EMPLOYMENT The number of working proprietors,
partners, permanent, part-time, temporary and casual
employees, and managerial and executive employees.
ENTERPRISE A division that is separately managed and
keeps management accounts. The most relevant
measure of the number of firms in an industry.
ESTABLISHMENT The smallest type of accounting unit
within an Enterprise; usually consists of one or more
locations in a state or territory of the country in which it
operates.
EXPORTS The total sales and transfers of goods
produced by an industry that are exported.
IMPORTS The value of goods and services imported
with the amount payable to non-residents.
INDUSTRY CONCENTRATION IBISWorld bases
concentration on the top four firms. Concentration is
identified as High, Medium or Low. High means the top
four players account for over 70% of revenue; Medium
is 40 –70% of revenue; Low is less than 40%.
INDUSTRY VALUE ADDED The market value of goods
and services produced by an industry minus the cost of
goods and services used in the production process,
which leaves the gross product of the industry (also
called its Value Added).
INTERNATIONAL TRADE The level is determined by:
Exports/Revenue: Low is 0 –5%; Medium is 5 –20%;
High is over 20%. Imports/Domestic Demand: Low is
0 –5%; Medium is 5 –35%; and High is over 35%.
LIFE CYCLE All industries go through periods of Growth,
Maturity and Decline. An average life cycle lasts 70
years. Maturity is the longest stage at 40 years with
Growth and Decline at 15 years each.
NON-EMPLOYING ESTABLISHMENT Businesses with
no paid employment and payroll are known as
non-employing establishments. These are mostly set-up
by self employed individuals.
VOLATILITY The level of volatility is determined by the
percentage change in revenue over the past five years.
Volatility levels: Very High is greater than ±20%; High
Volatility is between ±10% and ±20%; Moderate
Volatility is between ±3% and ±10%; and Low Volatility
is less than ±3%.
WAGES The gross total wages and salaries of all
employees of the establishment.
Research enquiries:
Liz Hague, Sales Manager
email: [email protected]
tel: +44 (0)1527 573 604
US toll-free: 1-866-545-5878
fax: +44 (0)1527 577423