Apparel Brands Look to Lean on Walmart and Target

Clothing Sales Follow the Foot Traffic

Despite health concerns and constrained budgets, Americans are still shopping for clothes. However, data shows Americans have been skipping the mall and department stores to head to Target (TGT), Walmart (WMT), and even Tractor Supply (TSCO).

Location data shows that foot traffic fell by 40 to 60% at Macy’s (M) stores this summer compared to the same time last year. Meanwhile, stores like Target and Walmart that sell clothing alongside household essentials and groceries were able to retain in-person customers. Target lost less than 10% of its foot traffic in June, July, and August. In fact, Target actually saw a jump in shoppers last month compared to September 2019.

Apparel sales reflect these foot traffic numbers. While sales at Macy’s fell 36% and Nordstrom’s (JWN) fell by 52% last quarter compared to a year earlier, Target sold 11.7% more clothes and accessories than it had the year before. Walmart’s warehouse store Sam’s Club and Tractor Supply Co. also saw a double-digit boost in apparel sales last quarter.

Some Companies Fear Brand Dilution

Many clothing brands have taken notice of the shopping shift and are responding with more offerings in big box stores. Levi Strauss (LEVI), for example, is taking its higher-priced jeans to 360 more Target stores by next fall. Levi’s more affordable Denizen brand is already available at Target. Just last year, the brand experimented with selling more upscale denim in Target stores under the Levi’s brand and was pleased with the results.

Some apparel brands aren’t quite as keen to make their clothes available in big box stores. Citigroup (C) analyst Paul Lejuez said this is because they’re afraid of spreading their brand identity too thin. Levi’s experience, however, proves more shoppers are looking for clothes, including slightly more upscale items, alongside their groceries. In additional evidence that big box stores could aid the apparel industry, Steve Madden (SHOO) executives said on a recent earnings call they will rely on Walmart and Target shoppers to be “growth customers” in the coming year.

Behind the Big Box Boom

Even before COVID-19, foot traffic was falling at department stores like Macy’s and Nordstrom due to the rise of ecommerce. Online shopping has picked up even more during the pandemic due to lockdowns, quarantines, and lingering health concerns.

That said, there are still shoppers who are heading to brick-and-mortar locations. The ones attracting the foot traffic offer essential items like sanitization products and groceries. Instead of separating their shopping, risk-averse consumers are buying clothing and groceries in the same store. This change in habits may endure post-pandemic—especially if brands decide to broaden their offerings in stores like Target and Walmart.

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