Global fashion spend forecast to plummet by nearly $300bn in 2020
Fashion is set to be the hardest hit retail sector by the COVID-19 pandemic with the global apparel market forecast to decline 15.2% this year (equivalent to $297bn).
According to GlobalData, the bulk of the drop in sales will come from the 10 hardest hit markets with the US accounting for 40% of the drop. This will inevitably lead to more US retailers filing for Chapter 11 bankruptcy protection, which both J.Crew and Neiman Marcus have both done recently.
While some markets are re-opening and retailers are opening the doors of stores again (this morning global giant Mango said it hoped to have 80% of its stores back open by the end of May), the recovery is expected to vary dramatically across markets depending on consumer confidence, the country’s reliance on tourism, the state of the economy and unemployment, and the level of “revenge buying” (a sudden release of pent-up demand from those in lock-down).
H&M has reported that demand in stores it has re-opened has been muted, while cities like London, Paris and New York are expected to be hit not only by suppressed demand from local consumers but a lack of tourism.
Other markets have, and are expected to, fare better, said Honor Strachan, principal analyst at GlobalData. “Some brands across China for instance are seeing store sales reach back up to 80-100% of pre-COVID-19 trading levels, while apparel retailers in parts of Germany are also experiencing a better bounce back than forecast.
"However, players in the likes of Hong Kong (which is heavily reliant on tourism spending) are experiencing far tougher trading conditions, and it is too soon to assess the recovery in Italy but we expect it to be long and drawn out – the same will apply to France, the US and the UK.”
Industry watchers are sceptical about the level of "revenge spending" across the markets given that consumers have become used to spending less, and many face job uncertainty. But even if sales bounce back to 2019 levels it will not be sufficient to make up for the periods of lost trading in the first half of 2020. The market is not expected to recover to its pre-COVID levels until 2022 at the earliest.