U.S. and the Global Apparel Industry
Trends & Challenges
May 2018
© 2018 Cotton Incorporated
COTTON INCORPORATED’S
2
CONSUMER & RETAIL INSIGHTS
625,000+
REVIEWS ANALYZED
1,500,000+
GARMENTS AUDITED
300,000+
INTERVIEWS CONDUCTED
© 2018 Cotton Incorporated3
Global Apparel Spending 2030Growth from 2016 to 2030 (Billions USD)
3
$587+112%
$401+19%
$439+18%
Source: Euromonitor
$25+37%
$14
+49%
© 2018 Cotton Incorporated4
Global Trends and ChallengesU.S. consumers’ interest in clothing
4 Source: Cotton Incorporated Lifestyle Monitor™ Survey
Preferred Item to Shop Top Purchase Drivers
Fit
Comfort
Quality
Price
Durability
Food – 33%
Electronics – 25%
Clothes – 25%
Cosmetics – 8%
Shoes – 5%
© 2018 Cotton Incorporated
Colombia and the Global Apparel Industry
5
Outline
Do Better for Self
Do Better for the World
SelfExpression
Retail Experiences
© 2018 Cotton Incorporated
Do Better for Self
6
Do Better for Self
Stress in Modern Life
Smart Clothing for Stress Relief
Performance Technologies
Outline
© 2018 Cotton Incorporated7
Problem: Stress in Modern Life
Source: Zipjet
Modern life has brought high stress to many
© 2018 Cotton Incorporated8
Performance Features in Apparel – U.S. Consumers want their clothing to do more
Odor Resistant
62%
FadeResistance
54%
Moisture Wicking
54%
Water Repellant
44%ThermalRegulating
48%
Sweat Hiding
54%
Durability Enhancement
52%
WrinkleResistance
55%
Percent saying they are likely to look for the following features in apparel:
Source: Cotton Incorporated Lifestyle Monitor™ Survey
© 2018 Cotton Incorporated9
Stress-Relieving PerformanceConsumers are attracted to smart textiles that address physical symptoms of stress
53% 49% 49% 44%37% 34%
51%44% 47%
41% 40% 44%
69% 64% 63% 58%49%
79%
Relieve Stress Monitor HeartRate
MonitorHydration
Alert forIncorrect
Movement
ManageMood/Emotions
MonitorPerspiration
U.S. Mexico Colombia
Percent saying they are likely to purchase clothing with the following features:
Source: Cotton Incorporated’s Lifestyle Monitor and CCI & Cotton Incorporated’s Global Lifestyle Monitor
© 2018 Cotton Incorporated10
Apparel for Stress ReliefIntegrating technology in “smart apparel”
© 2018 Cotton Incorporated11
Do Better for SelfApparel can help ease burden of modern life
Stress is building for consumers across the globe
Add performance features so that clothing can do more for consumers
Explore smart textiles for stress-relieving performance
© 2018 Cotton Incorporated
Do Better for the World
12
Do Better for the World
Environmental Issues
Circular Fashion
Sustainable Purchase Drivers
© 2018 Cotton Incorporated13
Environmental Issues Affect Daily Life
China94%
India91%
Mexico94%
Italy91%
Germany81%UK
75%
US75%
Consumers in developing markets are especially concerned with environmental change
Source: CCI & Cotton Incorporated’s Global Environment Survey
© 2018 Cotton Incorporated14 Source: CCI & Cotton Incorporated’s Global Environment Survey
U.S. Rest of World• Water Quality
• Air Quality
• Food Safety
• Depletion of Natural Resources
• Air Quality
• Food Safety
• Water Quality
• Climate Change
Top Environmental ConcernsConsumers across the globe have environmental concerns
© 2018 Cotton Incorporated15
Common Sustainable ActionsConsumers take various actions to improve environmental conditions.
Purchase appliances that conserve energy (72%)
Recycle cans, bottles, paper, etc. (82%)
Use refillable water bottle (74%)
Limit water usage at home (69%)
Recycle clothing or textiles (65%)
Purchase locally made products (62%)
Use my own bags while shopping (59%)
Reduce consumption of goods (55%)
Source: CCI & Cotton Incorporated’s Global Environment Survey
© 2018 Cotton Incorporated16 Source: CCI & Cotton Incorporated’s Global Environment Survey
Mexico• Protect the world for
future generations
• Live a healthier lifestyle
• Create a better world for myself
U.S.• It is the right thing to do
• Protect the world for future generations
• Live a healthier lifestyle
Why Take Sustainable ActionsConsumers across the globe have different motivations for seeking sustainability clothing
© 2018 Cotton Incorporated17
Effort Finding Sustainability ClothingSustainable clothing matters to consumers
Source: CCI & Cotton Incorporated’s Global Environment Survey and CCI & Cotton Incorporated’s Global Lifestyle Monitor
54%
42%
69%
48%
© 2018 Cotton Incorporated18
What Makes Clothing SustainableConsumers describe sustainable clothing as “Natural” and “100%” cotton
100% Cotton
47%
Natural
47% 43%
OrganicDurable or
Long-Lasting
43% 42%
Recycled
40%
High Quality
© 2018 Cotton Incorporated19
Brands Partner in SustainabilityBrands connect with consumers over environmental concerns
© 2018 Cotton Incorporated20
Circular FashionCommitment to a more sustainable future
© 2018 Cotton Incorporated21
Circular Fashion: Increasing Longevity Brands increase clothing durability to reduce industry waste
© 2018 Cotton Incorporated22
Circular Fashion: End of lifeBrands looking for end of life uses for garments
© 2018 Cotton Incorporated23
Cotton Isn’t Just for ClothingCotton has many uses
© 2018 Cotton Incorporated24
Do Better for the World
Recognize that environmental issues are important to consumers
Connect with consumers by speaking to environmental concerns and purchase drivers
Partner in sustainability with durable clothing and circular fashion
© 2018 Cotton Incorporated
Self Expression
25
Outline
SelfExpression
Athleisure Lifestyles
Denim Reimagined
© 2018 Cotton Incorporated26
Value Self-ExpressionConsumers value self-expression
64%68%77%
Percentage of consumers who value self-expression:
Source: Iconoculture Global Values Study
© 2018 Cotton Incorporated27
Authentic Clothing Consumers look to clothing to express who they are
Generation
Gen Z Millennial Gen X
72% 66% 59%
Gender
Women Men
62% 50%
Percent saying they wear clothing as a way to express themselves:
38%
Boomers
Source: Cotton Incorporated Lifestyle Monitor™ Survey
© 2018 Cotton Incorporated28
Global Denim Jeans and Athleisure SalesSales of athleisure levels off but both denim and athleisure are still projected to grow
Source: Global Industry Analysts, Inc. & Euromonitor International
50
52
54
56
58
60
62
64
66
68
2009 2010 2011 2012 2013 2014 2015 2016 2017
Bill
ion
s o
f U
SD
Sports-Inspired Apparel Denim Jeans
+3.5%
+2.5%
+28%
© 2018 Cotton Incorporated29
AthleisureBrands utilize cotton-rich collections for their athleisure lines
Percentage of consumers who prefer cotton-rich activewear.
54%
U.S.
Source: Cotton Incorporated Lifestyle Monitor™ Survey
© 2018 Cotton Incorporated30
Microplastics IssueMicroplastics pollution widespread
Source: Adventurers and Scientists for Conservation Microplastic Study
© 2018 Cotton Incorporated31
Microfiber ResearchCotton Research on Microfiber Degradation
Aquatic Biodegradation – Results0
10
20
30
40
50
60
70
80
90
% B
IOD
EGR
AD
ATIO
N
0
Cotton76%
Polyester4%
DAYS
25020015010050
© 2018 Cotton Incorporated32
Denim AffinityColombian consumers especially love denim
Percent who love or enjoy wearing denim:
Average days/week wear denim:
55%3.4 days
U.S. Colombia
Source: Cotton Incorporated’s Lifestyle Monitor™ and CCI & Cotton Incorporated’s Global Lifestyle Monitor Surveys
71% 4.6 days
Mexico
4.0 days82%
© 2018 Cotton Incorporated
33% 40%
41%42%
20% 2% 4%
58%
42%33%
33
Preference by Type
Run Errands
Out to Dinner
At Work
Hang OutAt Home
Denim
Activewear
Bottomswear Preferences by Occasion – U.S.Consumers prefer denim jeans outside the home
Do Yardwork
Source: Cotton Incorporated Lifestyle Monitor™ Survey
© 2018 Cotton Incorporated34
Authentic DenimConsumers view cotton as the only authentic denim
Percent of consumers who say cotton jeans are more ________ compared to jeans made with manmade fibers
Authentic
88%
Sustainable
88%
Comfortable
87%
Quality
85%
Source: Cotton Incorporated Lifestyle Monitor™ Survey
© 2018 Cotton Incorporated35
Self-Expression
Consumers value self-expression and look to clothing to express themselves
Incorporate cotton into activewearofferings to increase its comfort
Build on denim jeans’ cachet by marketing its versatility and style
© 2018 Cotton Incorporated
All About Retail
36
Outline
All About Retail
Consumer Shopping Journey
In-store Experiences
Online Inspiration
© 2018 Cotton Incorporated37
Increased Interest in Clothes Shopping, Mainly Among MenPercent of consumers who love or enjoy shopping for clothes
48% 48%
54%
52%
55%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Love/enjoy clothes shopping
27% 44%
62% 64%
Source: Cotton Incorporated 2017 Lifestyle Monitor™ Survey
© 2018 Cotton Incorporated38
Fast Fashion, Off Price, E-Comm CompetitionConsumers still like to shop, but have diversified their spending
Retailers 2016 2017
Mass Merchants 59% 58%
Low-tier Dept. 55% 53%
Department 39% 41%
Specialty 34% 37%
Fast Fashion 15% 21%
Off Price 32% 35%
Online Only 30% 35%
Source: Cotton Incorporated 2017 Lifestyle Monitor™ Survey
© 2018 Cotton Incorporated39
Stores Opening Focus on Price, Convenience, and BeautyOver 4,000 net stores opening
Source: Company Reports & IHL Group
• Rue 21
• Sears & Kmart
• Gymboree
• The Limited
• Bebe Stores Inc.
• Wet Seal
• JCPenney
• BCBG
• American Apparel
• Gordmans Stores, Inc.• Michael Kors• Macy’s• Gap• Guess• Chico’s• Lucy Activewear• Lululemon Athletica
• Dollar General
• Dollar Tree
• 7 Eleven
• Couche-Tard
• Aldi
• TJX
• Tractor Supply
• Sally Beauty
• Casey’s
• Ulta
• Five Below
Stores Closing: Stores Opening:
For Each Company Closing Stores, 2.7Are Opening Stores
© 2018 Cotton Incorporated40
U.S. RetailMany traditional retailers are struggling to meet changing shopping behaviors
Department
Sporting Goods
Off Price
Mass Merchants
Online OnlySpecialtyFast Fashion
Department
SpecialtyFast Fashion
© 2018 Cotton Incorporated41
Closets Still Full of ClothesU.S. consumers own slightly more than average
World
75
Colombia
103
U.S.
76
Average number of garments owned:
Source: Cotton Incorporated’s Lifestyle Monitor and CCI & Cotton Incorporated’s Global Lifestyle Monitor
© 2018 Cotton Incorporated42
Consumer Shopping JourneyConsumer shopping journey is complex
SEARCH THE WEB
EMAILED ADS
SHOPPING IN STORE
WORD OF MOUTH
PURCHASE
MOBILE SEARCH
ONLINE REVIEWS
SHARE
TV/DIGITAL ADS
ONLINE PURCHASE
© 2018 Cotton Incorporated43
Consumer Shopping JourneyMost U.S. consumers prefer to buy in store, but research most research clothes online
45%
66%72%
55%54%
67%74%
61%
Clothing research Pre-purchasequestions
Purchase Repeat purchase
U.S.
World
Percentage of consumers who prefer a physical store for the following:
Source: Cotton Incorporated’s Lifestyle Monitor and CCI & Cotton Incorporated’s Global Lifestyle Monitor
© 2018 Cotton Incorporated44
Where Does the Clothing Search Begin Online?Where do they get ideas when browsing online
SearchEngineswebsites emails apps
41% 24% 18%Retailers
28%
E-Commwebsites
16%
emails
13%
apps
12%
face-book
pinter-est
insta-gram
Social Media
17%
snap-chat
twitter/ tumblr
16% 16% 5% 3%
Source: Cotton Incorporated 2017 Lifestyle Monitor™ Survey
© 2018 Cotton Incorporated45
Where Clothing Ideas Come From: - U.S.Younger consumers focus more online for clothing ideas
45
35+ yrs. old 13-34 yrs. olds
28%Brand or
Ecommerce Sites
27%Television
23%Social Media
53%Already own
and like
50%Already own
and like
40%Television
41%Brand or Ecommerce Sites
44%Social Media
Source: Cotton Incorporated Lifestyle Monitor™ Survey
© 2018 Cotton Incorporated
76%
71%
66%
65%
64%
63%
56%
49%
46%
19%
Argentina
United States
UK
China
Mexico
Colombia
Japan
Indonesia
Germany
India
46
Social Media Continues to Influence ConsumersSocial network users by country
Source: Hootsuite & We Are Social’s Digital in 2018
© 2018 Cotton Incorporated47
Traditional Retail Is Still Very Much Alive In-store apparel buying is still king
Percentage of consumers who have ever shopped for clothing online:
Colombia
36%
U.S.
89%World
72%
Source: Cotton Incorporated’s Lifestyle Monitor and CCI & Cotton Incorporated’s Global Lifestyle Monitor
© 2018 Cotton Incorporated48
Why Prefer Physical Store – U.S.Consumers want to physically interact with clothing
Percent who prefer physical stores for the following reasons:
9%
23%
28%
31%
42%
54%
64%
69%
Customer service
Shopping experience
No waiting
Easy
No shipping cost
Feel fabric
See item in person
Try on clothes
Source: Cotton Incorporated Lifestyle Monitor™ Survey
© 2018 Cotton Incorporated49
AmazonShare of the Fashion Market Expanding
Source: Cotton Incorporated 2017 Lifestyle Monitor™ Survey, CommScore, Morgan Stanley
© 2018 Cotton Incorporated
63%
57%
46%
50
Get to Know Customers BetterPersonalize my shopping experience
Source: Cotton Incorporated’s Lifestyle Monitor Survey
U.S. Consumers <35U.S. Consumers
Wish brands knew what I like & how I shop 54%
Offered personalized shopping collections for me
© 2018 Cotton Incorporated51
Shopping is about ExperienceConsumers prefer a multifaceted shopping experience
Communication
REI: Climbing Wall, Denver, COB8ta technology “experience” stores
“The best retail environments will create a true sense of arrival, destination, and community”
- Retail Design Collaborative, 2018
© 2018 Cotton Incorporated52
Frictionless Payment A new way to bring shopping ease to physical stores
Support Frictionless
Payment Methods
79%
Sensor
Fingerprinting
50%
Facial
Recognition
35%
Retinal
Scanning
31%
Source: Juniper Research report: Future In-store Retail Technologies: Adoption, Implementation & Strategy 2017-2022
© 2018 Cotton Incorporated53
Consumers are using digital in-store already….Consumers remain digital even when they are in-store….
Browse clothing at
different retailersLook-up
coupons
31% 58% 44% 52%
U.S. Consumers Chinese Consumers
Compare prices
at different retailers
47% 32%
Source: Cotton Incorporated’s Lifestyle Monitor and CCI & Cotton Incorporated’s Chinese Consumer Survey
© 2018 Cotton Incorporated54
Mixing Digital and Physical is Essential Keep your customers focused on your brand and shopping experience
Would like brands to combine
digital in physical stores
43%
Gen Z55%
54% Gen Y
Overall
Source: Cotton Incorporated Lifestyle Monitor™ Survey
© 2018 Cotton Incorporated55
All about Retail
Preference for physical stores remains strong, especially in Latin America
Invest in consumer experience to combine entertainment and commerce
Seamlessly blend digital in the physical stores to keep consumers engaged
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