Woe for stores as shoppers look elsewhere for inspiration

While shopping at Bonobos on Monday, customer J.P. Grant gets assistance from guide Reynaldo Sanchez, as Grant shops for clothing at the brand's Guideshop, in New York's Financial District. More shoppers are looking to social media or curated selections for fashion inspiration. That adds to the woes of mall-based stores, as people are already buying fewer clothes, spending online or at discounters when they do, and demanding more personal and convenient ways to buy.
While shopping at Bonobos on Monday, customer J.P. Grant gets assistance from guide Reynaldo Sanchez, as Grant shops for clothing at the brand's Guideshop, in New York's Financial District. More shoppers are looking to social media or curated selections for fashion inspiration. That adds to the woes of mall-based stores, as people are already buying fewer clothes, spending online or at discounters when they do, and demanding more personal and convenient ways to buy.

NEW YORK (AP) - Erica Dao used to shop at malls once a month, looking in stores and seeing what the mannequins displayed. Now, she mainly looks for inspiration on social media.

"I discover brands through Instagram," said Dao, 33, of St. Paul, Minnesota.

Elizabeth Troy said she was the "queen of sales," going through discounted items at J. Crew and Banana Republic stores at malls near where she lives in Richmond, Virginia. But her go-to source has become the online subscription service Stitch Fix, which lets her try on clothes at home and decide what to keep.

"I almost never go out to buy now," Troy, 50, said.

Those kind of shifts illustrate the way people are changing how they buy clothing. Shoppers aren't just showrooming at stores and then buying the same items online if they can find better prices - it's a more significant separation from the mall.

That is spelling big problems for mall chains like The Limited, which has shut all 250 of its stores, and Wet Seal, which filed for bankruptcy. Department stores like Macy's and J.C. Penney - anchors for the malls - are also closing stores. Sears Holdings Corp. has said there's "substantial doubt" about its future but believes its plan to turn around its business should reduce that risk. The number of "distressed" retailers - those with cash problems and poor credit profiles facing strong competition - is at the highest rate since 2009, Moody's Investor Service said.

"Retail is increasingly becoming boring," said James Reinhart, CEO of the used-clothing marketplace thredUP. He said much of the merchandise at stores is homogenous, while online "each day there's a whole new assortment."

Department stores make regular announcements about the next way they're going to win customers back, like offering more athletic-inspired clothes or adding tech areas. However, they're fighting a market in which people are already buying fewer clothes, spending online or at discounters when they do, and demanding more personal and convenient ways to buy.

Brands like Stitch Fix and Bonobos offer curated selections based on people's preferences, while companies like thredUP capitalize on shoppers' increasing willingness to buy secondhand items from mall brands like J. Crew, Anthropologie and Athleta at big discounts. Deloitte estimates the nation's top 25 retailers have lost $200 billion to the smaller entrants to the market over the last five years.

"These internet-rooted businesses are connecting so well with consumers," said Marshal Cohen, chief industry analyst at market research firm NPD Group Inc. "They're offering personalization. They offer great value, quality service and a unique look. This is something that the apparel industry has been ignoring, but consumers are gravitating toward them. And they're becoming a big threat."

While U.S. clothing sales increased 3 percent overall to $218.7 billion last year, department stores and national mall-based chains saw a drop of 4 percent, NPD said. Discounters enjoyed a 1 percent increase, and off-price stores like T.J. Maxx and Ross saw sales rise 5 percent.

Clothes are also a smaller part of people's personal spending. In January 1990, Americans spent 5.2 percent of their overall expenditures on clothes and shoes. That compares with 3 percent in January 2017, according to an analysis by Michael P. Niemira, principal at the Retail Economist research firm. If demand held steady, Niemira said, there'd be an extra $255 billion spent.

Even so, retail space rose to 7.76 billion square feet in 2016 in 54 U.S. metropolitan areas - about six times per capita that of countries like Britain, the International Council of Shopping Centers said. Richard Hayne, CEO of Urban Outfitters, likens the retail industry to a housing bubble.

"We are seeing the results: doors shuttering and rents retreating," Hayne said after the company reported disappointing fourth-quarter results. He expects the trend to continue, and said online shopping is only partially offsetting lower store sales.