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Fashion Shoppers’ Shift to Digital Sends Physical Retailers Packing

Ted Baker

Consumers are increasingly buying clothing from third-party digital marketplaces, forcing more retailers to close shop.

Most recently, Ted Baker’s North American business announced Friday (May 10) that amid bankruptcy proceedings in the United States, it is closing 40 locations across the U.S. and Canada, kicking off liquidation sales. It also announced closing sales at eight Brooks Brothers locations and seven Lucky Brand stores in Canada.

Closures by the Hundreds

In recent months, brick-and-mortar clothing retailers ranging from the more premium to the more mass-market have been getting slammed. Earlier this month, for instance, teen clothing retailer Rue21 filed for Chapter 11 bankruptcy, per Reuters, sharing that it planned to close all 540 of its stores.

Last month, fast-fashion retailer Express announced that it filed for bankruptcy and plans to close more than 100 stores.

Macy’s shared in February that it intends to close roughly 150 stores by 2027.

In March, according to USA Today, activewear apparel retailer Outdoor Voices began closing all 16 of its stores, suddenly laying off all its employees.

Fashion Retail’s Digital Transformation

Most consumers continue to purchase clothing in stores, but eCommerce channels are gaining share, and when consumers shop for apparel online, it is often not with brands or retailers but with third-party marketplaces.

The PYMNTS Intelligence report “The Online Features Driving Consumers to Shop With Brands, Retailers or Marketplaces,” which drew from a survey of more than 3,500 U.S. consumers in October, sought to understand shoppers’ choices and behaviors when they buy online. The results revealed that among those who had bought clothing or accessories in the previous month, 62% did so at a physical store, and 42% did so at an online marketplace. Meanwhile, only 25% made such a purchase from a retailer’s site or app, and 20% from a brand’s site or app.

Meanwhile, Amazon is gaining share in apparel. The PYMNTS Intelligence study “Whole Paycheck Report: New Consumer Spend Data Finds Amazon Way Ahead of Walmart” estimated each of the two retailers’ market shares in various categories. Supplemental research from the study showed that in the fourth quarter of 2023, for the first time, consumers bought more than half of the apparel they purchased online from Amazon.

The online retail giant’s share of eCommerce consumer clothing spending rose to 52%, from 48% the previous quarter. Its share of total consumer clothing spending grew to 17% from 16% in the fourth quarter.

Overall, many consumers continue to treat themselves to clothing purchases even amid economic challenges. “The Nonessential Spending Deep Dive Edition” of the PYMNTS Intelligence series “New Reality Check: The Paycheck-to-Paycheck Report” revealed that among the 70% of retail shoppers who buy “nice-to-have” items at least sometimes, most spring for clothing that they want.

Thirty-six percent of those who bought nonessential, nongrocery retail items said their most recent such splurge was on clothing, while the next-most popular category was health and beauty, at 19%.

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