Fashion sales to drop 20%+ this year, says GlobalData, SS20 is "write-off"
UK retail will lose £12.6 billion from its expected consumer spend this year, according to new analysis from GlobalData. The company’s researchers think the impact of coronavirus will take a huge chunk out of overall sales, despite supermarket spending currently being at a high.
And there's no escaping the fact that with the UK seeing similar patterns to other countries, such as mass fashion store closures, there's a strong chance that we'll see similar percentage falls internationally too.
Looking specifically at Britain, Patrick O’Brien, UK Retail Research Director at GlobalData, said that while the food and grocery market should expand at its fastest rate for decades – around 7.1% – this won't stop the overall market falling as total non-food spend is forecast to go down by 8.9%. That's much worse than during the global financial crisis of 2009 when sales dropped 2.9%.
The worst news is that clothing and footwear will be the sector to suffer the most with a forecast 20.6% drop year-on-year.
That forecast is based on the assumption that the pandemic will peak next month and that most stores will remain closed until the end of May. But GlobalData is expecting non-food spending to start to recover in June although it doesn't think normal spending patterns will be seen until as late as October.
Of course, if the peak of the pandemic continues beyond the predicted time, the overall fall in spending could be much, much worse.
While food retailers are likely to benefit not just from the current panic-buying, but also from the closure of pubs, cafés and restaurants, fashion retailers will lose out from the overall suppression of social life.
The CEO of Next said last week that people don't buy new clothes when they're not going out and so, in some ways, a drop of only a little over 20% could be seen as a good result. But even a smaller drop would still mean some businesses will go under.
“Clothing and footwear spend is forecast to decline by £11.1 billion in 2020, which represents a fifth lost off its market value and is equivalent to the combined clothing sales of the three market leaders Primark, Marks & Spencer and Next,” Patrick O’Brien said. “Clothing and footwear will be the retail sector worst hit by the coronavirus in 2020, due to its non-essential nature and the eliminated need for new clothes as the public avoids social interactions and many self-isolate. This will cause the spring/summer season to be a write-off for apparel players.
“Retailers will be forced to cancel (as Primark has already done), postpone or redesign orders to avoid significant levels of terminal stock loss in June and July. We expect to see several fashion retailers collapse into administration as a result, with the sector already in a vulnerable state. Although the online channel will remain accessible to shoppers, we still expect to see a sharp decline in sales here as no amount of spare time at home to browse online will compensate for the lack of events to wear new clothes for.
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