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Malls face major shift

Online options lure consumers

NEW YORK — 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 says 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, Va. 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,” says Troy, 50.

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.

“Retail is increasingly becoming boring,” said James Reinhart, CEO of the used-clothing marketplace thredUP. He says 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. But they’re fighting a market in which people are already buying fewer clothes, spending online or at discounters when they do, and demanding more 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.

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. 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 a research analysis.

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