Fashion retailers tapping new market segments

For any apparel and fashion retailer, understanding and identifying the needs of their market is of paramount importance. Market segmentation is a process often employed to categorize customers based on predetermined characteristics. Gaining consumer insights by collecting information on age, personalities, preferences, gender, professions, and income can enable retailers to better target and promote their products in specific markets.

Thanks to market segmentation, fashion brands have created categories such as maternity wear, kids' wear, teen wear, and apparel for older generations. However, many brands are now exploring new markets and creating demand for their merchandise beyond their traditional demographics through in-depth studies. One driving factor behind this shift is the changing demographics. The newest and most recent generation that fashion brands around the world are targeting are the new millennials, also known as "echo-boomers."

Echo-boomers are typically defined as the generation born between 1980 and 2000. According to Accenture research, the approximate spending power of this population is projected to reach $1.4 trillion by the year 2020, accounting for 30 percent of total retail sales. Conversely, the study also reveals that the baby boomer generation will decline by 20 percent in the next seven years. The current economic downturn has affected the upcoming generation of spenders by causing unemployment and job losses.

Millennials are anticipated to be the largest demographic group spending on fashion apparel and electronic gadgets. A study by Bloomberg Business Week found that shoppers aged between 25 and 34 spend 8 percent more on apparel than those aged between 35 and 44, despite earning 22 percent less. Many fashion brands are increasingly focusing on marketing their products to teens and those in their twenties. Brands like Abercrombie & Fitch, Urban Outfitters, American Eagle, Forever 21, Hot Topic, Rue 21, Pacsun, and Aeropostale are prioritizing sales targeting a similar demographic.

Many luxury brands worldwide have traditionally marketed their products to urban adults, but there is a growing shift in focus towards young urban males. Luxury clothing brands previously catered to affluent middle-aged women, but they have realized through analysis and research that young metrosexual men are the future of retail. These young men are highly conscious of their clothing choices and are willing to invest in high-end garments. Moreover, this demographic has become increasingly demanding and seeks to stay in trend. With young males marrying later in life and working in prestigious companies, they have disposable income to spend on luxury clothing. Brands such as Burberry, Michael Kors, and Coach are closely monitoring this transition in demographics and gender preferences.