It’s January. It’s 2024. It’s a time when everyone is talking about weight loss.
But this year, the typical ambition is a key trend set to shape consumer behavior — along with shopping on TikTok and finding sustainability in fashion without footing the bill for it.
According to a report from The New Consumer and Coefficient Capital, the consumer is in good shape to shop this year and inflation has slowed — although, among the more than 3,000 Americans surveyed for the report, many cited rising prices as the U.S.’ biggest problem.
“We do see spending continuing to grow but we also see people having mixed feelings about their economic well-being. The good thing at least for consumer brands and the retail world is that people are still spending,” said Dan Frommer, founder and editor in chief of The New Consumer, which explores how and why people spend their time and money, adding that, “I don’t see anything that would change the story that we have right now.”
That story, it seems, will see TikTok Shop at the center of the plot. The e-commerce marketplace of the social media platform launched in September and has already rooted itself firmly as one to watch.
“Given the fact that it’s only been out since September and it’s already at that $3 billion run rate [predicted future performance based on current financial information] in the U.S. alone, really makes it seem like TikTok Shop could become the next Amazon. It really is going to be defining consumer shopping in the years to come,” said Natalie Borowski, an investor at Coefficient Capital, where she focuses on consumer and technology companies.
When placed in the scenario of being stranded on a desert island with access to only one social media network, 26 percent of Gen Z respondents said it would have to be TikTok (compared to just 11 percent of Millennials). Of the TikTok users who have already made a Shop purchase (more than half of whom are under 35), 92 percent said they’d make another one and 90 percent said the e-commerce felt like a natural extension of their TikTok experience. On average, these shoppers are buying 1.3 items at roughly $30 an order, with jeans, sweatshirts, hair care and skin care among the top products purchased.
That order value is putting TikTok Shop among the category of low-cost, high-trend leaders like Shein and Temu. But this isn’t a moment for the midmarket and luxury leaders to tune out.
“You can say it is just low-end, but that is volume taken away from Macy’s, Kohl’s, et al., and certainly Amazon, Target and Walmart. The whole purpose of driving market share is to trade up, so the threat is not limited to cheap goods,” said John Thorbeck, chairman of consultancy Change Capital, who is planning to publish an assessment of global apparel supply chains for the International Trade Center, the U.N.’s agency for trade. The assessment, titled “Under the Banyan Tree: Buyers and Suppliers in Fashion,” is slated to be published in the first quarter of this year.
“For all the criticism of being cheap, Gen Z’s ability to trade up and invest further is going to happen,” which means they’ll better be able to put their money where their values are and they won’t be spending with brands that don’t align, however luxurious, he said.
When it comes to trading up, Gen Z is already doing so in the clothing and skin care categories, according to The New Consumer.
So what does that all mean for sustainability? Likely that “cheap and chic” had better become “cheap, chic and sustainable.”
More Shein shoppers, The New Consumer report noted, make sustainability claims than the average consumer. Sixty-seven percent of Shein shoppers, for example, said they’d pay more for environmentally friendly goods, compared to 53 percent of overall shoppers.
While there’s the simple fact of a divide between what many consumers would like to do and what they actually do, whether for economic reasons or otherwise, these want-it-all young consumers are pushing for a pipe dream to become reality — because they believe it can.
“There is some idealism that’s kind of natural for being a younger consumer and wanting to shop at a trendy place where you can get a lot of stuff for a little,” Frommer said. “But the dream, of course, is that it’s both, that through technological and other advancements in manufacturing and businesses putting their money where their mouth is, someday sustainable products will be the inexpensive products.”
The gap in pricing between sustainably marketed products and those that aren’t has started to get somewhat smaller (a 27.6 percent difference in 2022 compared to 39.5 percent in 2018) since the pandemic and its resulting price hikes, according to Circana and NYU data cited in The New Consumer report. “It’s not quite the solution that we want, but it is helpful,” Frommer said.
What Borowski sees in all of these movements is a chance for change in sustainability at fashion’s lower end. “I actually think this could be an opportunity for platforms like Temu to maybe think about becoming a little bit more sustainable in some ways given that they know their consumer does care about it,” she said.
Already, as Thorbeck notes, Shein, Temu and TikTok Shop benefit from manufacturing at low or no risk because of small-batch, rapid-cycle, responsive production — all alternate sides of the sustainability conversation.
“There’s no excess inventory, they sell out, they’re just chasing demand,” he said. “They don’t need to take the risk of long lead times and guessing at inventory, they just sell what’s on trend.”
Beyond what the consumer will look like, Thorbeck believes 2024 is the year of the manufacturer, which means brands and businesses not looking to partner and share both risk and reward across the supply chain should be on their guard.
Companies like Shein, Thorbeck said, benefit from less risk and use less capital because they don’t build up inventory and, therefore, don’t have excess to markdown at a loss. They’re also offering manufacturers something luxury players haven’t.
“They pay the suppliers in 15 days. Often, American retailers won’t pay their suppliers for 90 to 100 days,” Thorbeck said. “So if you’re a factory and you’re doing small batches to test trends and you get paid in 15 days, you have choices. You don’t have to put up with the fact that big retailers are pounding you down for lowest prices.”
The year of the manufacturer will also be the year of weight loss, according to The New Consumer report. And despite the fact that prices are high, which often means people would be glad for more money, more Americans at all income levels said they’d rather feel 25 percent healthier than have 25 percent more money. Weight loss is the primary target in getting to that healthier state, with 40 percent of those surveyed noting a high interest in losing weight. Many are turning to GLP-1 medications like increasingly trendy Ozempic and Wegovy to get there.
As Borowski said, “Some people think ‘maybe the weight loss thing is less relevant to the specific category that I focus on,’ but because these people that are on GLP-1 medications, 86 percent of them say they feel like different people, their habits in their entire life are changing. They change their personal style, they’re buying more clothes or trading up in almost every category.
“The knock-on effects of this trend I think we’re going to see more and more.”
