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Lost retail store sales for apparel across Europe?

Full report: Future of European Apparel Industry: Evolution of Stores

Lost retail store sales for apparel across Europe?

2 minute read

This article is the second in a three-part series. It looks at the impact of Covid-19 and lost physical retail store sales across Europe within the clothing industry. It forms part of a research report entitled: A seamless fit - Evolution of stores in a digital-centric customer journey.

 

Store sales already under pressure pre-Covid

Lasting behavioural changes from Covid-19 will accelerate the shift towards online – beyond the step-change that European apparel markets have already experienced from the pandemic.

However, store-based sales in European apparel markets were already under pressure prior to Covid-19 due to the organic migration towards online. Changing consumer attitudes to purchasing new outfits (e.g. mindful shopping, ‘peak consumption’) and discount pressures from a highly competitive European apparel market have also contributed to structural weakness in store-based sales in recent years.

Across the sample of European countries analyzed, stores accounted for €9.1 billion fewer sales in 2019 compared with five years earlier. Store performances inevitably deteriorated in 2020 as the pandemic necessitated a shift to online during store closures. This resulted in record sales declines for apparel (Fig 8).

 

Fig 8 - Apparel store sales were on the decline even before the pandemic

Apparel store sales were on the decline even before covid-19 - Retail Economics

Source: Retail Economics

 

[continued below]

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This work forms part of a wider piece of research and is a downloadable in pdf format

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Pandemic-induced shift to online

Apparel markets have witnessed a step-change in the proportion of online sales due to lockdowns and enforced store closures. Across key European markets, Retail Economics forecasts online to account for almost half (48%) of apparel sales by 2025, compared to pre-pandemic levels of 28% in 2019.

The UK is set to be the most highly penetrated market, with 60% of apparel sales projected to occur online by 2025.

The UK is set to be the most highly penetrated market, with 60% of apparel sales projected to occur online by 2025. However, all European markets are poised to see a significant rise in online penetration rates for apparel over a five-year forecast period (Fig 9).

 

Fig 9 - Online penetration rates for apparel by European market

Online penetration rates for apparel by European market - Retail Economics

Purple = actual,  Pink = forecast. Countries include the UK, France, Germany and the Netherlands. Source: Retail Economics

 

Download the full report here to view online penetration charts for individual countries: UK, France, Netherlands and Germany.

Online penetration rates for apparel clothing EU - Retail Economics

 

Behavioural change will lead to fewer store visits

Footfall at apparel stores will continue to face downward pressure over coming years, struggling to return to pre-crisis levels. This is partially due to consumer behaviour changes becoming embedded (more online but also increased remote working) as the pandemic turbocharges digital relevancy.

Our research found a strong correlation between consumers who said the pandemic has permanently changed their shopping behaviour, and their intention to visit stores going forward.

For example, in the UK, more than a third of consumers said Covid-19 caused a permanent change in the way they shop for apparel, with a similar proportion (35%) intending to visit stores less frequently than before the pandemic (Fig 10 – download full report here to view chart).

As a result of the shift to online and fewer store visits, Retail Economics estimates that across the four European countries combined, apparel stores will lose €8 billion in sales per year on average, over the forecast period – compared with a scenario where Covid-19 does not impact consumer behaviour.

Online engagement for apparel will lead to fewer physical store visits - Retail Economics

Across the four European countries combined, apparel stores will lose €8 billion in sales per year on average.

Aggregated across the five-year forecast period, this amounts to c.€40billion in reduced store-based sales at apparel retailers across the key European markets. In line with the findings from the consumer panel research, the UK will be most affected, with stores projected to lose over €17 billion (£14.5bn) in apparel sales as a direct impact of Covid-19 (Fig 11).

 

Fig 11 - Accumulated loss in store-based apparel sales due to permanent changes in consumer behaviour caused by the pandemic

[Download the full report to view more additional charts for: the UK, Germany and the Netherlands]

Accumulated loss in store-based apparel sales due to permanent changes in consumer behaviour caused by Covid-19 - Retail Economics

Source: Retail Economics

 

Download the full report here to discover more insights into how the erosion of store-based sales will likely evolve over the next five years as a direct consequence of Covid-19. 

 

Things to do now

Explore the next article in this series here which looks at five ways that the role of stores are evolving in a digital-first environment.

Download the full report here

Found this short article interesting?

This article forms part of a thought leadership report entitled “A seamless fit - Evolution of stores in a digital-centric customer journey” produced by Retail Economics in partnership with Eversheds SutherlandIt is the second of a three part article series which explores the future of the European apparel industry and the role of physical stores. For retailers and brands seeking insight into the impact of the crisis across Europe, the full report provides data-driven insights and guidance for action.

View Full Report Here

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