Online differentiates winners and losers

Online is not the saviour of all businesses

When one of the UK’s most proficient and respected retailers decided to shut down its online operation it was a bit of a shock because the channel was expected to offset some of the sales it was losing through the enforced closure of its stores as a result of the Coronavirus.

Fashion bellwether Next came to the conclusion that this would not only be the safest course of action to protect its employees but it also pointed to the fact that with its customers locked in their homes the demand for new clothing was severely limited.

Too right. The impact on the UK clothing and footwear sector of the virus will be cataclysmic, with 2020 sales forecast to be down by as much as £11.1 billion on the previous year, according to GlobalData.

There is no escaping the fact that the situation right now is absolutely catastrophic for certain businesses but those retailers that have to date been addressing the move to non-store channels and been aligning their physical and digital assets are much better placed to weather the virus.

Although GlobalData does not expect online revenues to fully counteract lost store sales when things (hopefully) pick-up in the second half of the year, it reckons those with strong online propositions will succeed while those with weaker web offers will potentially fall by the wayside. Where this places Primark is anybody’s guess!

Not only is the virus shifting more sales to the online channel it is also radically accelerating the closure of thousands of physical stores. The Centre for Retail Research calculates that as many as 20,000 shops that have been closed might never re-open again. This suggests the power will increasingly move towards the pure-plays and those with powerful multi-channel offers.

Whatever the factors behind such changes in the marketplace – and the wider world too – the reality is that there is an ongoing reconfiguration of the clothing and accessories industry, along with many other categories, and it involves the move to a more digitally-led model.

Glynn Davis, Retail Insider