Apparel sales may finally be on the rebound

A report from Mastercard also reveals a shift back towards spending on services and a normalization in online shopping.

Online shopping

According to a Mastercard report on national retail sales, the long-suffering fashion industry may finally be emerging from its pandemic doldrums.

The brand’s latest SpendingPulse report reveals that this January, Canadian retail sales (minus auto), increased by 4.3%, largely driven by in-store spending, which was up 14.8%.

Mastercard’s SpendingPulse reports on national retail sales across all payment types in select markets globally, including Canada, coupled with survey-based estimates for other payment forms, such as cash and check.

Apparel sales have been lagging behind recovery in other sectors, but were up 45% year-over-year, in what Mastercard says is the strongest growth rate for January in the history of its SpendingPulse report. While that may be due in part to a weak baseline comparison (sales are still down 4.9% compared to 2019), the apparel sector has experienced positive growth for 11 consecutive months, suggesting that consumers are ready to refresh wardrobes and dress to impress for gatherings taking place in 2022.

The adjacent jewelry and leather goods category was also up 34.5% year over year, as sales continued to outperform in January ahead of Valentine’s Day.

Looking at recent results from major apparel retailers backs up the Mastercard findings, regardless of style. On the casual side, Under Armour recently reported record sales and earnings, while Ralph Lauren raised its revenue forecast amidst strong gains by fellow luxe apparel brands like Versace owner Capri and Prada.

According to Mastercard, consumer spending is being buoyed by pent-up savings, wage growth and the continued re-opening of the “experience economy,” and beneficiaries also include home furnishings and home improvement, which are also seeing double-digit growth as the focus on spending on home spaces continues.

Mastercard also noticed a gradual shift back to services compared with goods, with the resumption of in-person experiences. Restaurant sales grew 19.8% year-over-year, though they are still down 23.3% compared to 2019 pre-pandemic levels.

Electronics sales growth is one area that saw a slump, down about 25% and remaining flat compared with 2019. Online sales also fell into negative growth territory (-20.6%) when compared to the elevated growth in January 2021 when consumers were shopping from home due to pandemic-related restrictions. That said, online sales are still robust, up 112.9% when compared to January 2019.