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'Fashion sales won't return to normal until Christmas 2023' say retail analysts

Christmas shoppers in 2018
Christmas shoppers in 2018

Designers hoping that the run-up to Christmas will soothe some of the pain of 2020 have been left disappointed by Boris Johnson’s latest press conference, which confirmed that the UK is in the midst of a second wave. However, with no signs of a second national lockdown in the immediate future, there is still some hope for the retail sector.

Current data from McKinsey shows that 43% of people are spending less on clothing than they did before the pandemic – and that if the UK fails to contain the virus successfully over the next few months, fashion sales will only return to 2019 levels by the end of 2023. “[This] will mean a continued shift to shopping online,” says Anita Balchandani, a partner at McKinsey specialising in retail. “That being said, the need for self-expression and getting back to some kind of normalcy is starting to take hold.”

Few brands are finding this a fruitful year, but the consensus at present is that the pain of the pandemic is not being equally spread across the fashion industry. At times like these, ultra-cheap brands like Boohoo – which posted stellar results yesterday despite a scandal-filled summer – are down by just 19% overall. Meanwhile designer labels selling a much needed bit of glamour are down by 26%, which is better than mid-range retailers that are down by 35%.

tracksuit olivia von halle
tracksuit olivia von halle

Equally, brands that have been able to diversify into homeware and nightwear will do better over the months to come than those that make formal clothes.

“Clearly the more your business relies on bricks and mortar stores the worse the effect of a lockdown will be,” says Olivia von Halle, founder of the designer pyjama brand of the same name. “Different sectors within the industry will be affected differently – I expect ready-to-wear and accessories will suffer hugely whereas for loungewear, we expect to see a positive effect on sales.”

Justin Thornton, the co-founder of Preen agrees. “The immediate impact has been tough on fashion as the desire to shop has been somewhat replaced by home and the feeling of nesting,” he says. “Our Preen Home has been very successful during this period. We are now noticing this is slowly changing and there is a demand for more special fashion pieces. We are almost 85% sustainable and we are noticing that if a Preen dress is sustainable or eco there is a much higher demand for it.”

But within the mid-range mass market, sustainability isn’t enough – and while soaring nightwear sales are helping, brands that went into lockdown with a strong customer base are the most likely to survive the next six months

“There has been a real polarisation of performance,” says Balchandani. “Averages stop mattering in times like this. People are no longer going into multiple retailers on a trip to the high street - instead they go to one specific website or the store of choice, reinforcing a winner takes all situation.”

Zara, Topshop, & Other Stories, H&M and Cos, while reporting lower sales than usual, are surviving the crisis thanks to loyal customers who have transferred their allegiance to their online sites. Primark, despite having a minimal online presence, has fared far better than expected. But brands such as Debenhams, M&S and John Lewis that aren’t as trend-driven and appeal to an older market (who are understandably shopping less) are the ones struggling to stay afloat.

Preen
Preen

If McKinsey’s prediction that sales might not return to normal until Christmas 2023 prove correct, a high proportion of brands are unlikely to survive. The ones that do will need to be savvy about what they order.

“Brands are preparing for this and adjusting to the demand reset and channel shift,” says Balchandani. “They will have recalibrated volumes – not just in quantity but in terms of product mix. We'll see far less formalwear and tailored work-wear, as people become much more cautious about buying those elements of their wardrobe.”

While Boris Johnson emphasised how much better prepared the nation is now compared to in spring this year, the figures alone suggest we face at least another six months of turmoil and a very disrupted Christmas season. According to McKinsey, 75% of brands will be in imminent distress without government help – and if we want to emerge from this crisis with a functioning fashion industry, the government is going to have to give the sector even more support than it already has.

“Certainly store staff will need job protection, which the furlough scheme did well, and I would like to see that fully extended in the event of a full national lockdown,” says Von Halle. “What we need from the government is clear communication with enough time for companies to prepare and to keep the time period to a minimum.”

Whether that is possible during a crisis where local lockdowns and new rulings are made and adjusted on a day-by-day basis will become clearer in the months ahead.

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