Fashion retail to lose £11.1bn in sales in 2020 due to COVID-19
Fashion will take the biggest hit of all retail sectors due to the COVID-19 Coronavirus crisis with a predicted -20.6% slump in sales for 2020 versus a previously forecast growth of 0.6%. This represents a loss in sales of £11.1bn.
According to preliminary estimates from Globaldata, the impact of coronavirus (COVID-19) will wipe £12.6bn from total UK retail sales this year, which is the is equivalent to more than Aldi’s total UK sales last year.
Grocery, however, is expected to 7.1% this year, against a previous growth forecast of 1.2% as shoppers stock-pile on essentials and supermarkets, which are deemed essential retail, are permitted to stay open during the crisis.
“The UK food and grocery market is now expected to grow at an unprecedented rate of 7.1% in 2020 – adding £6.8bn to the previous forecasted annual spend in 2020. This additional growth stems from a significant uplift in volume sales, as shoppers buy more than they need at supermarkets (particularly across food and household products), as well as gaining from consumers transferring spend from foodservice operators to supermarkets and other food retailers," said Globaldata UK Retail Research Director Patrick O’Brien.
Clothing & footwear, however, is set for a devastating -20.6% drop for the year as consumers are forced to stay at home and events, such as large social gatherings and holidays, are cancelled.
“Clothing and footwear spend is forecast to decline by £11.1bn in 2020, which represents a fifth lost off its market value and is equivalent to the combined clothing sales of the three market leaders Primark, Marks & Spencer and Next.
"Clothing and footwear will be the retail sector worst hit by the coronavirus in 2020, due to its non-essential nature and the eliminated need for new clothes as the public avoids social interactions and many self-isolate. This will cause the spring/summer season to be a write-off for apparel players.
“Retailers will be forced to cancel (as Primark has already done), postpone or redesign orders to avoid significant levels of terminal stock loss in June and July. We expect to see several fashion retailers collapse into administration as a result, with the sector already in a vulnerable state. Although the online channel will remain accessible to shoppers, we still expect to see a sharp decline in sales here as no amount of spare time at home to browse online will compensate for the lack of events to wear new clothes for.”
Overall the total retail market for 2020 is now estimated to reach £333.7bn from the original forecast of £346.3bn, which is 1.7% down on 2019 (GlobalData had originally forecast +2%). The company is currently forecasting a rebound in 2021 but only back to 2019 levels. When the health crisis recedes, there will be a recession to deal with, and consumer confidence will take a long time to recover.