The internets share of UK clothing sales appears to be on the decline

The internet's share of UK clothing sales appears to be on the decline

Between June and September 2016, the internet's share of UK clothing sales fell consistently – something Mike Flanagan doesn't think has ever happened in the history of selling clothes, anywhere, ever before.

According to Britain's Office for National Statistics (ONS), the internet accounted for 13.3% of all clothing stores' national sales in the previous quarter (April-June).

As in just about every quarter since the ONS began monitoring internet sales in late 2013, that share was up on the previous quarter and up on the same quarter the previous year. Indeed, just about the only thing you have been able to rely on in our industry (apart from weather that's not right for selling clothes) has been relentless internet growth.

But over the past three months, this seems to have gone into reverse. The June-September share (12.7%) was below the 13.3% of the previous quarter – and unchanged from the 12.7% we saw in June-September 2015.

What's happening? The phenomenon marks a few rarely-noticed features of selling clothing these days.  

Sales at specialist clothing stores sales are now falling faster than any other UK retailers

In September 2016, sales in Britain's specialist clothing stores, adjusted for inflation, fell faster year-on-year than in any other kind of retailer:

Sector Growth on Sept 2015
Predominantly food stores 2.90%
Predominantly non-food stores 2.40%
– Department stores 7.40%
– Textile stores 7.50%
– Clothing stores -6.40%
– Footwear stores 1.90%
– Household goods stores 0.30%
– Other stores 7.80%
Non-store retailing 18.50%
Fuel stores 5.10%
Total 4.10%

In Britain, unlike the US, department stores are doing rather well

In the US, most industry observers are aware of two big shifts: the shift to the internet and the decline in department stores. They all blamed Macy's August decision to close 100 of its 850 stores on the internet's growing share of clothing sales.

In Britain the past few years have been a lot kinder to department stores – although there are far fewer of them. It is the clothing specialists that have been seeing sales collapse.

This September's 6.4% decline in clothing store sales compares with a 7.4% increase in department store sales. There was nothing unusual about September: department store sales were 40% higher than in January 2010, while clothing store sales were just 5.6% up.

Britain's full-line department stores, like John Lewis, have seen an extraordinary sales revival over the past few years – which is closely linked to the rarely observed revival in major city centres, where most full-line department stores are located.

Retail has struggled in much of suburban Britain, and in many smaller towns. But central London is not the only place that's crowded with shoppers. The centres of old industrial cities like Liverpool and Leeds, as well as heritage cities like Oxford and York, are heaving – and development money has been pouring in.

In the US, Macy's problems are similar to the problems facing clothing specialists and Marks & Spencer: too much space added in the past 20 years, while sales have stayed sluggish.

And department stores aren't alone

The retailers that are really growing in Britain, of course, are what the ONS calls "non-store retailers," whose September sales were up 18% on the previous year.

They're a mixed group: they include mammoth players like Amazon, and fashion websites like Asos and Zalando. But a fifth of this group's sales aren't bought online: they may involve phone orders or sales through the physical stores many direct retailers now run for showrooming or click & collect. Though the e-commerce share of these retailers is growing, the segment is growing so fast that its conventional sales are just about holding up.

So apparel specialists' internet offerings are being hit on all sides

Over the past decade most conventional British specialist clothing stores have been hit by Primark: cheaper, more fun to shop and brilliant at managing shoppers' attitudes through its use of social media.

Now their websites are being hit by all sorts of competition. Asos and Zalando are sharper on fashion, but there's tough competition elsewhere on the fashion spectrum. Missguided and Boohoo offer affordable fun, while the likes of House of Bruar or Charles Tyrwhitt aim at the older end of the market – where both population and disposable income are growing faster. Not a day passes without at least half a dozen pieces of literature from these retailers pouring into Clothesource Towers.

Meanwhile, Amazon keeps on keeping on.

Is this a truly smart business strategy?

Of course there's no hard evidence any big retailer is making real returns from e-commerce yet. So maybe conventional clothing retailers are losing share in internet sales deliberately?

Right now, for most retailers, the less they actually sell online the better their profit.

That strikes me as improbable – but only because I'm wedded to the philosophy that most things happen by mistake rather than by cunning plans.

Perhaps Britain's clothing retailers have stumbled their way into the first successful new business concept we've seen for decades. The real solution to the unprofitability of internet apparel retailing may be to blunder your way out of the whole sorry business.