Covid-19 will wipe off US$297bn from the global apparel market in 2020 – a 15.2% decline on 2019 – according to a new forecast from GlobalData.

The 10 worst impacted markets, in terms of value, will represent 85.0% of this total loss, with mature markets suffering the hardest – the US will account for 42% of all lost spend, which will contribute to more major chains filing for chapter 11 over the next few months.

Though the recovery has already started across markets released from lockdown and social-distancing measures, it is varying dramatically depending on consumer confidence, the country’s reliance on tourism, the state of economy and unemployment, and the level of “revenge buying” (sudden release of pent up demand from those willing and able to spend).

Some brands across China, for instance, are seeing store sales reach back up to 80-100% of pre-Covid-19 trading levels, while apparel retailers in parts of Germany are also experiencing a better bounce-back than forecast. However, players in the likes of Hong Kong (which is heavily reliant on tourism spending) are experiencing far tougher trading conditions, and it is too soon to assess the recovery in Italy but we expect it to be long and drawn out – the same will apply to France, the US and the UK.

We are forecasting a bounce-back in apparel spending of 17.1% in 2021, but that will not compensate for the loss of sales in 2020. Even if retailers in some markets do experience revenge spending in the initial months following a lift in lockdown and then see trading return to 2019 levels later in H2, across the 49 markets we cover we do not expect this to make up for the lost periods of trading in H1. In 2019 the global apparel market was worth US$1,955bn and is not forecast to return to or exceed this until 2022.

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Source: GlobalData

Note: The chart shows the 10 worst hit global apparel markets in terms of value in US$. The value and percentage declines show the variance between our revised 2020 forecasts and 2019 market sizes.

Mature markets will suffer the most, with Covid-19 lockdowns and the hit to consumer confidence accelerating the severity of existing conditions. Many apparel mid-market players across mature markets have lost relevance over the last 10 years, with retailers failing to evolve to a shift in shopping habits, while the transference of consumer spend from retail to leisure has also hit their long term prospects – making the current crisis the final straw for many struggling operators.

Covid-19 has now claimed the likes of JC Penney, Neiman Marcus and J.Crew in the US, and Oasis/Warehouse in the UK, but these were all retailers with limited, or no, opportunities for market share retention or acquisition over the next few years, with stronger rivals squeezing them out. What we will be left with post Covid-19 in mature markets is an even more streamlined apparel mid-market, excess high street and shopping centre capacity, and a bigger dominance of the global fashion market leaders – such as Inditex and H&M Group.

As apparel retailers are forced to adapt to a ‘new normal’ as physical stores start to reopen, the measures put in place to provide safety to staff and customers will hinder their recovery.

Long queues outside stores to abide by capacity regulations, limited in-use fitting rooms, inability to collect/return online purchases (some players will enforce that this is done remotely/contactless), sterile environments, and closed instore services such as cafes or personal shopping will all deter some consumers from wanting to visit stores. However, reassuringly for retailers, those consumers that will visit stores will have a higher spend per head than before, since customers will want to make their trip worthwhile especially since visit frequency will be less regular, helping to offset some of the lost sales caused by lower footfall.