Latest fashion sales dip could be fundamental shift in consumer thinking - BDO
The UK fashion sector has a major problem on its hands as Britons spend less money on fashion. That’s the worrying conclusion from the latest set of sales figures for the month of May released Friday by BDO.
Fashion sales on physical stores fell 3.9% last month with the sector seeing negative monthly like-for-like sales in four out of the five months for the year-to-date. And the reliance of fashion on the weather, which rarely plays ball in Britain, highlighted just how tough the challenge is.
BDO said: “Sales were negative in the first three weeks of May, before bouncing into positive territory with the better weather in the last week of the month, but off of a poor base last year,” meaning that the positive final week was flattered by having an easy comparison with the last week of May in 2016.
Overall footfall was down in the first three weeks of May too, with the low of -2.5% coming in week one, and the month ending with only a 0.7% increase as the weather improved in week four
The plight of fashion compared other sectors can be seen from the fact that total high street sales fell only1.3%.
Could the four months of falling fashion sales this year be seen as a very big exception rather than the norm? Probably not. Fashion sales have risen for only three months out of the last 18 months.
So what is to blame? In one word: e-tail. The UK is the world’s second most engaged e-shopping market (according to Kantar Worldpanel), behind South Korea, and more people are buying their clothes and accessories online. E-sales rose 19.3% in May, BDO said.
That was the second lowest rate for this year, but it’s unclear exactly whether the is bad news or not. Some sort of growth slowdown is only to be expected as the sector matures and as the e-market gets much bigger. However, BDO said that online sales saw a marked slowdown in the first three weeks of the month, reflecting the weak sales in physical stores. That suggests the same trends that are impacting physical fashion retailer are also hitting the online world.
The report said: "The decline in footfall and the marked slowdown in non-store sales for the first three weeks of the month, points to a real slowdown in consumer spending on retail in May. The depleted spending levels come off the back of a rise in inflation of 2.7% in April, its highest level since September 2013."
So was there any good news? Well, that near-20% rise in e-sales is still good growth. And in physical stores, the lifestyle sector (which includes gifts, health & beauty and leisure goods) was up 3.9% as tourist numbers hit record levels and the pound stayed weak. Homewares sales also managed a rise, albeit one of only 1.2%.
But overall, the BDO said the monthly tracker points to household budgets coming under pressure from higher inflation and wage stagnation with fashion the biggest casualty of this. It remains to be seen whether this will improve for the rest of the year or whether fashion is having to face a fundamental shift in how consumers spend their discretionary cash.
Copyright © 2022 FashionNetwork.com All rights reserved.