Demand for fast-fashion in the US continues to grow

Despite growing concerns surrounding climate change and overconsumption, demand and expenditure for fast fashion in the US continue to gain traction.

One of the largest markets in the world for both fast fashion and luxury, consumer expenditure on fast fashion grew 2 percent compared to the same period last year, according to new data from Consumer Edge (CE), a provider of global consumer transaction data.

In contrast, the direct-to-consumer (DTC) luxury sector experienced a downturn in 2023, with spending declining by over 7 percent, a significant shift from the almost 15 percent growth witnessed in 2022.

Pointing out dwindling disposable incomes and a shift in consumer spending, Michael Gunther, VP and head of insights at Consumer Edge, said in a statement: “Our data points to the challenging macroeconomic environment having a considerable impact on spending habits in 2023."

"The bifurcated performance, with more affordable fast fashion increasing while luxury brands decrease, is likely because of a squeeze on real incomes. This dynamic logically plays out in the luxury sector where products tend to have a higher price tag.”

One of the most in-demand fast-fashion brands in the US this year was, to little surprise, Chinese powerhouse Shein. Demonstrating sustained expansion throughout the year, Shein's revenues soared by over 20 percent in the first ten months of 2023, compared to the same period in 2022.

Another popular fast-fashion brand was Uniqlo, witnessing a 28 percent increase in the same period. Commanding the largest portion of the U.S. fast fashion market, Shein now accounts for approximately 40 percent of the entire feast-fashion sector's spending.

On the other hand, Swedish giant H&M has experienced a noticeable downturn, with its US market share dipping by about 2 percentage points in the 12 months leading up to November 2023, a trend that seems to coincide with Shein’s meteoric rise.

The luxury sector experienced significant impacts from a subdued interest in discretionary spending. Leading luxury fashion houses like Louis Vuitton, Gucci, and Burberry all faced notable reductions in spending growth during 2023. Only Hermes emerged as the standout performer in this sector, witnessing an approximate 15 percent increase in spending in the initial ten months of 2023

CE ‌data also showed that the buying interest of younger consumers (under 35 years old) in both fast fashion and luxury products has seen a decline compared to the previous year. This reduced enthusiasm could be a reflection of lower disposable incomes, placing them in a more vulnerable position amid broader economic challenges.

In 2022, fast fashion items were purchased by 11 percent of US shoppers aged 35 and above, a figure that has remained consistent in 2023. Regarding luxury goods, there was a slight change: while 10 percent of this age group bought luxury items in 2022, the percentage slightly decreased to 9 percent in 2023.