Clothing and footwear is the UK retail sector likely to be worst hit by the coronavirus (Covid-19) this year, with spending expected to decline by one-fifth, according to preliminary forecasts.
The sector will feel the impact more than others due to its “non-essential nature,” data and analytics company GlobalData says.
Yesterday (23 March), all UK retailers of non-essential goods were ordered to close their stores for the next three weeks in a country-wide lockdown. Only chemists and supermarkets are allowed to remain open.
“Clothing and footwear spend is forecast to decline by GBP11.1bn (US$13.06bn) in 2020, which represents a fifth lost of its market value and is equivalent to the combined clothing sales of the three market leaders Primark, Marks & Spencer and Next,” explains Patrick O’Brien, UK retail research director at GlobalData.
“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.”
O’Brien adds 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.”
UK clothing and footwear sales are expected to be down by 20.6% in 2020. This compares to the previous 2020 growth forecast of +0.6%.
Overall, the impact of Covid-19 will wipe GBP12.6bn from UK retail sales this year, according to GlobalData preliminary forecasts.
“The total retail market for 2020 is now estimated to reach GBP333.7bn from the original forecast of GBP346.3bn, which is 1.7% down on 2019 (GlobalData had originally forecast +2%). The company is currently forecasting a rebound in 2021 but only back to 2019 levels. When the health crisis recedes, there will be a recession to deal with, and consumer confidence will take a long time to recover,” O’Brien says.
The revised forecasts are predicated on the pandemic peaking in April with most stores either closed or severely affected until late May, with non-food spend starting to recover in June, but with more normal spending patterns not arriving until October.
Kate Ormrod, lead retail analyst at GlobalData, adds: “Amid a UK lockdown and self-isolation, buying new clothes and footwear is far from a top priority for consumers, making spring/summer a season to forget for fashion retailers – but one with long-lasting consequences.
“Though retailers are already striving to entice spending with discounting and promotions rife and loungewear at the forefront of marketing campaigns, we expect these to have little impact at present as consumers acclimatise to their new daily routines, while perceived supermarket shortages ensure food shopping remains top of mind. However, as we enter April – our expected peak of the pandemic – and approach Easter, it is likely some consumers will want to treat themselves, especially if a lockdown extension is mooted.
“Fashion specialists must exploit the online channel and social media to keep shoppers engaged while their bricks-and-mortar operations are out of action, with brands needing to foster support if they are to retain relevance when consumers begin spending on non-essential clothing and footwear again. However, any notion that online sales will fully counteract those lost in-store is wishful thinking.
“With the likes of M&S, Moss Bros, N Brown and Superdry having already issued profit warnings, the impact of coronavirus has been swift. Significant fallout across the fashion sector is expected this year as fundamentally weaker players fail to recover once demand finally picks up in H2.”
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