Welcome to the free version of our newsletter that analyses themes emerging from our live Market Reports. The client version of this Shop Talk includes:
- Access to the Market Reports.
- Detailed analysis of general spending trends across the major retail categories during April 2024.
- An analysis of changes in spending share among listed retailers in the Apparel category, across various income brackets.
As a taste of what to expect, here’s a look at how the major apparel retailers are retaining customers, and how average transaction values have shifted since March 2023.
With limited growth in consumer income, and surging international competition from the likes of Shein and Temu, the priority for retailers is to keep the customers they already have. Customer retention is hard to measure, but we think it can offer an objective metric.
The chart below shows average three-month retention for the major apparel retailers. We define three-month retention as the proportion of customers who shopped at a particular retailer in the past three months, compared to the preceding three months.
Even among a digitally savvy, relatively-affluent sample of consumers, PEP has the highest retention rate among the top apparel retailers: 54% of customers who shopped between November and January shopped again at PEP between February and April. CottonOn has the lowest retention.
In general, the data supports our intuition that the more fashion-orientated retailers (like H&M and Shein) have a lower retention rate than retailers that offer everyday clothing (like PnP Clothing and Ackermans), or retailers with a very broad offering (like PEP and TFG).
Like most retail metrics, retention tends to be seasonal. Therefore, we have also shown annual growth in retention as an indicator of the trend. On this basis, retention is falling at most retailers. Superbalist is experiencing the weakest retention while Shein is the overwhelming standout over the year.
AVG 3-MONTH CUSTOMER RETENTION VS ANNUAL GROWTH IN RETENTION
Price relief
When it comes to average transaction value (ATV) at listed retailers, this metric has also slowed or declined in most cases in recent months. This slowdown is shown in the charts below, which plot the average change in ATV for two income brackets: R15–20k pm and R40–60k pm. The charts are similar and show how consistent this trend is across the demographic spectrum.
Relative to its peers, TFG again follows a more resilient path.
In general, declining ATV might reflect moderating inflation and/or greater discounting to clear stock.
CHANGES IN ATV AT LISTED APPAREL RETAILERS, BY INCOME BRACKET
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