Clothing Stores NAICS 458110

Feb 19, 2026 - Return Fraud and Shrink Pressure US Clothing Stores

• US clothing retailers face mounting profit pressure as returns and shrink reached $796 billion in 2025, according to Appriss Retail data in Chain Store Age. Of $706 billion in total merchandise returns, 14.2% ($100 billion) was preventable loss from fraud and abuse, including 12% from returns abuse and 2% from fraud. Returns channels most relevant to apparel remain in-store driven: 52% ($367 billion) came from buy in-store, return in-store (BISRIS), while 29% ($208 billion) from buy online, return in-store (BORIS) represents the fastest-growing fraud and abuse vector, critical for omnichannel clothing brands. Additionally, $90 billion in shrink was reported, with 73% preventable, including $26 billion from employee theft, and $19 billion from inventory errors. However, returns also drive loyalty: 80% of shoppers say a good return experience boosts repeat purchase intent, and 73% made an extra purchase after a positive return. For apparel retailers, balancing loss prevention with seamless returns is now central to protecting margins and customer retention.
• January data from the CNBC/NRF Retail Monitor report shows continued strength for US clothing stores amid broader retail growth. Total retail sales (excluding autos and gas) rose 0.2% month over month and 5.72% year over year, marking the fourth consecutive monthly gain, while core retail sales increased 0.15% month over month and 5.51% year over year. Clothing and accessories stores led major categories, climbing 0.23% month over month and a robust 9.39% year over year, the strongest annual gain among reported sectors. These results follow a 4.1% year-over-year increase during the record-breaking November–December holiday season. With retail contributing $5.3 trillion to GDP and supporting 55 million US jobs, apparel’s outsized growth underscores its role as a key driver of industry momentum entering 2026.

• According to Retail Dive, Francesca’s announced closure underscores ongoing financial and supply-chain pressures within the US clothing stores industry. The specialty apparel retailer will cease operations following lender defaults, the loss of investor funding, and disrupted supplier financing. Francesca’s operated more than 450 stores across 45 states, signaling a sizable contraction in brick-and-mortar apparel retail. The shutdown includes the closure of its Houston corporate headquarters, affecting 202 employees through rolling layoffs. Despite prior efforts to stabilize the business, including discussions with at least six potential investors and a post-bankruptcy plan to maintain 275 stores, the retailer was unable to secure sufficient capital or product flow. For the broader clothing store sector, the closure highlights continued vulnerability among mid-sized fashion chains, particularly those reliant on external financing and complex supplier networks amid a still-challenging retail operating environment.
• The US clothing stores industry is projected to grow at a CAGR of 2.6% between 2025 and 2029, according to a forecast from Inforum and the Interindustry Economic Research Fund, Inc. The expected growth rate is slower than the overall economy‘s anticipated growth. Consumer sentiment remained low through 2024 as policy uncertainty rose, affecting the retail and wholesale industries. Factors that continue to limit consumer spending are lower consumer sentiment levels, higher interest levels, and elevated price levels. Real disposable income is being limited by a slow rise of employment and higher consumption prices, with a projected increase of real disposable income of 1.8% in 2025 and 1.6% in 2026. The report noted that some shifts in consumer behavior persisted in 2025, including increased online shopping.