"They are my suits."
Translation:Sono i miei abiti.
In your example loro is a possessive pronoun (their) and it still refers to people ;)
Esso and derivatives are used quite a lot in formal contexts, so you'll find them in newspaper articles, political speeches, textbooks, and so on; the '88 movie "They Live" was translated as "Essi vivono" because the subject wasn't human. On the other hand they've pretty much disappeared in informal contexts, so you aren't likely to find them in blogs, modern novels or in everyday speech.
Seems like a reasonable question so I just did a search on Duolingo for 'costume' and found that Shetuti said "Costume in general means a certain type of clothing (tipo di abbigliamento). Normally we use abito for very specific occasions, like those who are common or typical in religious ceremonies (wedding, baptism), for the clerical robe (vestment/habit) or in related idiomatic expressions. I prefer to use completo for men and tailleur for women. Depending of the context of course, but costume rather means swimsuit (you can add da bagno to disambiguate), traditional ethnic wear (folk costumes) or disguise (at a masquerade for example). My mother tongue is italian "