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E-tail surge not enough in May as lockdown means fashion sales plunge

Published
Jun 5, 2020
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Online sales helped to salvage some good news out of the gloom during May with BDO’s Retail Sales Tracker for the month showing a 129.5% e-sales uplift year-on-year.


The lockdown was bad news for fashion stores in May



But that was almost the only cheerful news in the report — total like-for-like sales (that’s both in-store and non-store) still fell by 18.3% as the lockdown meant consumers couldn’t visit non-essential stores even if they’d wanted to. The May figure was better than the historic plunge seen in April but was still discouraging compared to a 2.2% rise this time last year.

Despite e-tail surging, the fact that almost a fifth of discretionary spend was wiped out in May highlights the intense pressure many retailers are under as they prepare to reopen this month in the face of disrupted supply chains, weak cash flows and still-cautious consumers.

The May figures were particularly grim for the fashion sector as its total like-for-like sales dropped by 22.6% from a base of +2.7% for May last year, the 2019 figure having been higher than the rise for the retail sector as a whole at the time. The latest plunge is the third straight negative monthly result for total fashion like-for-like sales. However, the category did see a small improvement on previous months due to slightly higher online spending.

Yet that will be small comfort for many retailers as they work out what to do with vast amounts of unsold SS20 stock and have to choose between margin-crushing mega discounts or a cash flow-suppressing decision to keep some of the stock for the SS21 season.

Sophie Michael, Head of Retail and Wholesale at BDO LLP, said: “Despite the significant pick-up in e-commerce, the monumental collapse in discretionary spend remains stark as retailers continue to face challenging headwinds.

“As shops look to reopen, they will face disrupted supply chains, mounting out-of-season stock and reduced footfall, as well as staffing uncertainty. These problems will be further compounded with the financial burden of implementing new measures to keep staff and customers safe.

“While government support so far has provided a lifeline, the reality is that the situation on the high street will remain critical for the foreseeable future. More than ever, retailers will be looking to both central government and local authorities for creative solutions to ensure the high street has a viable future as lockdown restrictions continue to lift.”

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