SIC 5651 Family Clothing Stores

 
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SIC 5651

This industry consists of establishments primarily engaged in the retail sale of clothing; furnishings; and accessories for men, women, and children. Generally referred to as retail family clothing stores, this industry includes jeans stores and unisex clothing stores, but excludes stores targeted at one sex or age group.

NAICS CODE(S)

448140

Family Clothing Stores

INDUSTRY SNAPSHOT

According to the American Apparel and Footwear Association, in 2003 sales from retail family clothing stores totaled $59.4 billion, a number unchanged from the year before, but an enormous increase from 2001 levels. The numbers were continuing upward in 2004, largely due to increased consumer spending as the economy stabilized and grew. Prices were also continuing to fall, and in 2005, the apparel industry was affected by the lifting of quotas in all member countries of the World Trade Organization. Countries no longer had limits on what could be exported for U.S. markets. For the consumer, that translated to expected price drops of up to 20 percent.

The clothing store industry was highly competitive, and marketing research, advertising, and sales promotions were central to these companies' operations. Other factors affecting sales in this industry included national economic trends, regional population growth, seasonal factors such as weather and holidays, and dramatic changes in fashions and clothing trends.

ORGANIZATION AND STRUCTURE

According to the National Retail Federation, the vast majority of family clothing outlets in the late 1990s were chain stores, roughly 20 percent of which were operated as franchises. Family clothing stores were either chain stores (including department stores) or independently owned.

The large companies that owned clothing outlets across the nation generally operated distribution centers where clothes were received from the manufacturers and shipped to the outlets. Unlike warehouses, these distribution centers did not store items for a long period of time. Generally goods stayed at a distribution center for only about 48 hours before being shipped to the retail stores that had placed the orders. The link between manufacturer and retailer was maintained by manufacturers' sales representatives and the retailers' merchandise buyers.

Small clothing retailers generally did not own distribution centers, though they still received items that were held at these centers. These smaller retailers tended to purchase inventory from distributors who represented several manufacturers. These retailers also ordered items solicited through distributor catalogs.

The organization of the retail family clothing store industry has changed since the beginning of the 1990s. The 1991 recession caused many firms to buy other, usually smaller, retailers. With these mergers, the decentralized purchasing practices of smaller retail chains were centralized and handled strictly by the main office, thereby cutting down on the number of buyers employed by any one company.

The internal structure of companies in this industry varied. Some companies made buying trips to manufacturers and wholesalers, while other companies were called on by manufacturers' representatives. These companies also differed in the way that the various internal departments related to one another. In some companies, buyers and merchandise managers worked closely with the advertising department in deciding the type of promotional media to use and the layout of item displays. Other companies hired autonomous advertising agencies for the promotional aspects of the business. Some retail clothing stores sold clothes under their own brand name. In these cases, the retailer typically designed the clothes and had them produced by a clothing manufacturer, while the retailer maintained a staff of employees to monitor the work of the manufacturers.

The advent of discount retailers has affected the structure of family clothing stores. These retailers have gained large market share by offering low cost, high quality merchandise as well as maintaining low overhead costs.

BACKGROUND AND DEVELOPMENT

Retail family clothing stores originated in America during colonial times. In these early days, stores were extensions of tailor shops. There were few stores relative to the size of the growing population, however, because owning a variety of clothes was considered a luxury. During the 1800s, with the expansion westward, clothing retailers were mostly manufacturers who sold their merchandise through catalogs. In the late 1800s, with innovations in mass manufacturing and the growth of cities most retail clothing stores began operating exclusive of tailor shops.

During the twentieth century, retail family clothing stores moved from individually run small stores to regional chains, and then, in the 1990s, to nationwide chains of large stores. This consolidation trend resulted from stores moving from smaller spaces in the cities during the 1970s and 1980s into suburban shopping malls, where larger store space and new buildings were available. Such vast quantities of space also facilitated the growth of off-price retail stores, which offered discounted merchandise in large superstores, such as Wal-Mart, or in regional outlets, such as Hit or Miss.

Typically, off-price clothing outlets were in more favorable remote suburbs or newly developed areas where real estate was inexpensive, or they were in suburban shopping strips with other off-price retailers. Lower costs meant higher profits for such establishments. These outlets also kept prices down by purchasing large volumes at low prices from manufacturers. Usually manufacturers were not able to make a profit on the items, often due to the rapid change in fashion trends, and were only seeking to cut their losses.

Other types of stores to emerge from the growth of suburban shopping were price clubs, warehouse stores, and hypermarkets. Price clubs and warehouse stores, where customers could purchase clothes at significantly reduced prices, also resulted in part from the recession at the end of the 1980s and early 1990s. Hypermarkets also featured reduced prices, but their appeal was in the variety of stores and services offered under one roof. Often referred to as "malls without walls," these stores first appeared in France. All of these larger stores carried an average of 40,000 items at any given time, compared with 25,000 items at typical retail family clothing outlets.

Despite the growth in store size, automation did little to change the basic operations in stores. Computerized cash registers allowed for more efficient management of money and inventory, but these systems were not fully employed throughout the industry. In some cases, the retailer did not have the capital to pay for point-of-sale scanners that record the exact item sold, including color and size, and related technologies, in addition to the costs of retraining employees.

The retail family clothing store industry has also made significant marketing changes and advances over the...

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