Contributor: Nicole Larson, Manager, National Retail Research | U.S.
Recent shifts in consumer behavior have aligned with economic sensitivities on inflation around the cost of goods and services. The behavioral adjustments have sparked a slow shopping movement, with consumers concentrating on value-driven purchases. These cost-conscious consumers’ intent on maximizing their dollars weigh the pros and cons of sustainability and affordability as they consider how to engage in retail therapy.
Initial foot traffic data suggests that fast-fashion retailers receive the most attention from shoppers, even as many struggle to meet sustainability standards. Global fashion retailers with headquarters in Europe, including Primark (Ireland), Inditex (Spain) and H&M (Sweden), as well as Japan’s Uniqlo, have seen an average 0.3% increase in foot traffic in the first quarter of 2023, which may be inspiring expansion plans.
Primark announced a goal to open 60 stores in the U.S. over the next three years – part of their global expansion strategy to open 530 stores by 2026. The U.S. business performed well in 2022, and the success of its recent store openings has reiterated Primark’s unique formula of fashion and homewares as an excellent value for consumers.
Although Uniqlo sales retracted in its Asian markets, the retailer has had profitable growth in North America, claiming less than 1% of the $291 billion retail clothing market and accelerating its plans to open 200 U.S. locations over the next four years. Uniqlo saw an increase of 14.4% in foot traffic in 2022, and maintains a strong market position as the world’s third-largest apparel retailer in terms of sales, behind Inditex (Zara) and H&M.
Inditex, Zara’s parent company, operates shy of 100 stores in the U.S. Their 2-year expansion plan aims to scale their portfolio by 30%, including new stores, relocations and increased footprints of existing stores. Earlier this year, Zara leased a 30,000-square-foot store in San Antonio’s North Star Mall.
H&M is hyperfocused on optimizing omnichannel sales channels that appeal to customers’ preference for shopping where and when they are inspired. The brand’s optichannel strategy harnesses each element of its store portfolio to meet consumers’ needs for in-person interactions with participation across its digital channels. In addition, the retailer’s expansion plans include leveling out its portfolio with 100 new store openings across growth markets and siphoning 200 store closures in well-established markets, releasing 2.2 million square feet of commercial real estate.