UK Clothing & Footwear Sector Report summary

January 2021

Retail sales rose by 0.8% in December, year-on-year, according to Retail Economics. Total online retail sales rocketed by 45.8% in December, value and non-seasonally adjusted, according to ONS. Shop price inflation edged down by 0.6% in December, excluding fuel, according to ONS. Clothing retail sales declined by 14.8% in December, year-on-year, value and non-seasonally adjusted, according to Retail Economics. Average weekly sales for Clothing were £1,034m in December, according to Retail Economics. Clothing saw sales decline by 14.8% in the key December sales period. 

Redistribution of festive sales

The distribution of sales over the festive months has been unlike others in recent years. Until 2 December, England faced a national lockdown. Consumers delayed spending during November’s lockdown leading to pent up demand in December. More than a fifth (22%) of consumers purchased clothing and footwear products in a physical store in December that they previously delayed because of the closure of non-essential retail in the ...

Savings boost as online soars

This has led to a boost to disposable incomes, particularly across affluent households who are more likely to be in secure jobs and save on big ticket expenses. But even average households saving on commuting, nights out and holidays have potentially accumulated £10,500 of savings by December. 

Channel redistribution

Stay at home shoppers created an uneven impact between dwindling footfall and a sharp shift towards online shopping – which polarises the pace at which retailers can hope to recover. Footfall at retail destinations was dismal, declining 59% month-on-month across high streets and shopping centres in November. However, retail parks again proved more resilient, with falls of ‘just’ 28.2% (Springboard).

Polarised market

This has seen a polarisation between online-only players, multichannel rivals, and high street giants. Pureplay have outperformed, including Boohoo with sales up by 40% in the four weeks to end-December. Meanwhile, multichannel retailers able to focus on digital (e.g., Next) managed to offset the devastation seen among store based retailers, including Primark which is on course to have lost £1bn worth of sales a year on from the UK’s first national lockdown.

Margin pressure

Although anxiety remains, consumers have responded to discounts. Notably, between November and December, the proportion of clothing and footwear items being discounted increased. But rather tellingly, the promotions offered were not as deep as in previous months, leading to prices in the category edging down 1.8% year-on-year in December compared to a steep 3.6% in November. Pressure is mounting on costs though. Textile factory gate prices suggest input prices were 1.4% higher in December than a year earlier. 

Footwear – Retail Economics Index: December 2020

Footwear continued to drag its heels on overall retail sales in the month and remained at the bottom of growth rankings. Sales slipped by an eyewatering 15.7% in the key festive month of December. While this marks an improvement on lows during 2020, across November and December, sales declined by 18.6%. 

Home comforts

Formalwear and men’s ranges have been the weakest performing segments of late, while anticipated school closures hampered the normal back to school uplift in late December. With festive celebrations cancelled and up to a third of workers performing jobs from home, consumers have shunned fashionable footwear and are instead opting for more comfort-driven purchases.

Being selective

But lately, fear and uncertainty has softened consumer confidence. Although GfK’s consumer confidence index ticked up two points to -26 in December, it has ultimately remained in deeply negative territory since the outbreak of Covid-19. This is reflected in shoppers being more selective with their purchases. In addition, households have recently had to adopt major lifestyle changes; and with more at home, spend has shifted away from formalwear.

Online Clothing & Footwear – Office for National Statistics – December 2020

Online Clothing & Footwear sales growth rose by 47.1% in December year-on-year, against a 1.3% fall in the same month a year ago – the second strongest performance in 2020. Sales growth outperformed the three-month and 12-month averages of 45.2% and 20.6% respectively. Online sales of Clothing & Footwear accounted for 33.7% of total retail sales in December.

Macro Factors – Consumers

Household consumption rose by 19.5% in the third quarter of 2020. The main drivers were increased spending in restaurants and hotels, and transport. Household consumption remains 9.8% below its Q4 2019 level. GfK’s Consumer Confidence measure improved by seven points to -26 in December, this is 11 points lower than a year ago.

Macro Factors – Ipsos Retail Performance

Footfall fell by 53.7% in December 2020 year-on-year, according to latest figures from Ipsos Retail Performance (which measures footfall in over 4,000 non-food stores across the country). The steepest declines in footfall for the month of December were in London & South East (-61.9%) followed by Scotland & N Ireland (59.2%) and The Midlands (-52.1%). Similarly, footfall fell in SW England & Wales (-50.9%) and Northern England (-44.8%).

Macro Factors – Labour Market

The latest ONS labour market data shows a significant increase in unemployment rate while employment rate continues to fall. Though redundancy levels reached record highs, total hours worked increased from the low levels in the previous quarter. The number of paid employees fell by 2.7%, some 828,000 employees in December compared with February 2020 according to flash estimates using PAYE data – around 52,000 higher than in… read more

Macro Factors – Earnings

For November in nominal terms (unadjusted for price inflation): Average regular pay (excluding bonuses) for employees in Great Britain was £531 per week before tax and other deductions from pay – up from £510 per week a year earlier. Average total pay (including bonuses) for employees in Great Britain was £562 per week before tax and other deductions from pay – up from £543 per week.

Macro Factors – Costs, Prices and Margins

Sterling’s trade weighted index dipped marginally in December, down 0.3% on the previous month as Brexit uncertainty and rising coronavirus cases impacted the index. In terms of exchange rates, the £/$ rate is currently around 1.36, while £/€ rose to around 1.12. Both commodity indexes we track appreciated in January. Indeed, the Thomson Reuters CRB Index fell by 3.9% year -on -year from -11.9% in December, compared to a 17.6% annual fall for the GSCI Commodities benchmark. The rise was driven by expectations of strong international demand during 2021, particularly from… read more

UK Clothing & Footwear Sector Report summary January 2021