Fast Fashion Claims Another Retail Apparel Casualty

Clothing might not be an essential purchase like food, water and shelter, but consumers spend so much on apparel that a chic skirt or a pair of designer boots might as well be necessary for survival. The statistics prove that Americans are in love with fashion, as the U.S. apparel market comprises 28 percent of the global clothing market to the tune of $331 billion, according to Statista.

However, while U.S. consumers have a constant love for fashion, the retailers which they shop from are constantly changing and evolving.

On Monday (Oct. 5), American Apparel, one of the trendiest clothing brands of the early 2000s, filed for Chapter 11 bankruptcy in Delaware, according to a Oct. 5 press release from the company. While American Apparel was dealing with legal costs related to litigation against former founder and CEO Dov Charney, there was another source of market competition that siphoned sales away from the formerly popular chain: fast-fashion retailers.

“This process will ultimately benefit our employees, suppliers, customers and valued partners,” CEO Paula Schneider said in a press release. “American Apparel is not only an iconic clothing brand but also the largest apparel manufacturer in North America, and we are taking this step to keep jobs in the USA and preserve the ideals for which the company stands.”

While traditional apparel sellers like Old Navy and Gap and fast-fashion retailers like H&M and Zara have coexisted in the same market space for some time, American Apparel’s downturn might indicate the start of a slow decline for unwieldy apparel merchants that don’t have answers for fast fashion’s two primary value propositions.

First, as Forbes explained, clothes are inexpensive in both price and quality, allowing customers to buy up styles of the season they like without worrying about the high-priced commitment to an individual article of clothing. Secondly, this high turnover of products allows fast-fashion merchants to restock their stores with new styles and designers to keep customers coming back.

American Apparel isn’t the only traditional apparel retailer that has struggled to resist fast fashion’s pull on consumers. According to data from Forbes, Gap – once the king of the casual apparel mountain – has watched its market share in the U.S. drop from 5.1 percent in 2010 to 4.7 percent today. However, Gap still sits several percentage points above retailers like Old Navy and Banana Republic.

Not all traditional apparel retailers are cowering in the face of the fast-fashion onslaught, though. J.C. Penney has announced plans to launch a new brand specifically targeted at the fast-fashion market, and CEO Marvin Ellison explained at a recent conference that the company had been studying fast fashion’s successful tactics closely.

“We are piloting a private brand called Belle & Sky, which is our version of fast fashion that is a private brand,” Ellison said, as quoted by The Street. “I have had two trips to Asia since March, and it was very informative because we spent a lot of time with suppliers talking about fast-fashion retailers, not trying to replicate fast fashion as a strategy, but to learn elements of the strategy.”

What exactly are those elements that J.C. Penney will try to incorporate? Details are still scarce, but it’s expected that items will include T-shirts priced under $20 and jackets ranging from $60 to $120. Prices like that might not bring J.C. Penney the success of H&M or Zara, but it’s a clear indication that fast fashion is the new normal in the apparel retail business.

After all, when it comes to traditional apparel retailers, if the fast-fashion shoe fits, they better wear it.