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Saturday, January 20, 2007

Scott Burns: Americans not that badly off

There's a lot of doom and gloom usually about how little Americans save, so it's nice to see a bit of good news (especially from Scott Burns, who's usually a pessimist).

One household in four owns its home mortgage-free. An impressive 61 percent of households age 65 and over have no mortgage.

What's amusing is that he's mystified by apparel expenditure:

The survey shows that spending on apparel and services is only $1,509 a year for middle income households, rising to only $3,704 for top quintile households. I know we’ve got the most efficient distribution system in the world, but if that’s what we spend, what’s supporting all those Wal-Marts, Kmarts and Targets — not to mention a zillion other clothing retailers?

A quick search finds that there are about 100 million households in the US. If each of them spends $1500 a year, then apparel is a $150 billion market. The Gap only had 16 billion in revenues, so the US market can support 10 companies of approximately that size, plus or minus a couple to account for Wal-Mart.

$1500 a year still sounds like a lot of clothing to me, but I guess that's only 10 sets of cycling jerseys + shorts at full retail. I guess if you have to buy suits for work, that $1500 goes really quickly.

1 comment:

md said...

Spending $1500 annually on clothing doesn't really seem like that much when taken per household, with the average household size being about 2.5 people.

I just ran a report in MS Money: Over the last three years I spent about $900 on clothing. It fluctuates wildly; last year I spent only $35 on clothing. That's for a single-person household - and I am the opposite of a clothes horse. In contrast, imagine having to buy clothing for a growing kid every year.

That's something I really like about my current job - I wear clothes until they get pretty threadbare, but no one seems to mind. I can keep my clothing budget very low.