A T-shirt might look like a simple souvenir, for an artist, it can be much more than that. Music streaming usually pays relatively small amounts per listen, while merchandise can generate a larger amount from one purchase.
There's also something streaming can't provide:
A physical connection to the artist.
A fan wears the shirt.
Someone asks about it.
Another person discovers the artist.
The merchandise travels further than the original show, that's why artists don't necessarily see merch as an extra.
For some, it's an important part of the business around their music.