U.S. consumers have been “trading down” across all categories since inflation hit record highs with many previously loyal customers forgoing shopping at their favorite stores and retailers when discounts were offered elsewhere or choosing to purchase alternate brands with lower prices. It’s a renegotiation of budgets , and one that, according to data from Bank of America, is leading to more value-seeking when it comes to apparel purchases.
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In Bank of America’s latest consumer study, the company’s expert economists used collected data to better understand how three tiers of apparel (premium, standard and value) have been, and are being impacted by consumers’ shifting shopping behaviors brought on by the current economic landscape. Overall, Bank of America’s internal card data suggests that since July 2022 as U.S. consumers shop, spending at discount retailers has grown faster than retail spending in general with overall spending’s decline coming from trading down when it comes to apparel.
In its report, the company finds that household spending on value apparel in July 2024 increased 13 percent from July 2019 , though apparel spending overall increased by just 5 percent. While inflation is at play here, spiking prices for these nonessential items, the company’s data also shows that this difference can also be compared to changes in grocery spend, which increased almost 30 percent during the same time frame. “In our view, this suggests the trade down to value apparel reflects the broader costs of living facing households, rather than the direct impact of higher clothing prices,” the authors of the report said.
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Compared to other generations, Millennials and Gen Z consumers were revealed as the most likely to spend more on value apparel. While the data suggests that wearing more comfortable clothing while working from home has played a part, a perhaps more notable factor, is that these younger consumers are simply earning less. At the same time, fast fashion provides a lower-cost option to keep up with trends.
Unsurprisingly, lower-income households were found to also be driving spending on value apparel over premium and standard apparel retailers. Middle and higher-income consumers, however, also exhibited a shift away from premium apparel purchases beginning in early 2021, though the company’s report said this was likely due to a change in how people are dressing over financial strain.
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