Report Summary

Period covered: 01 Jan 2021 – 31 Jan 2021

Note: Reporting periods are either one month or two months behind the current month as standard.

Out of crisis comes opportunity

• A third national lockdown decimated Clothing (-27.9%) and Footwear (-30.2%) sales.
• Clothing & Footwear were once again the hardest hit sectors, being more reliant on physical touchpoints in the customer journey.
• Reflecting the closure of non-essential stores, Online Clothing & Footwear sales penetration hit a record high of 56.1% in January.
• As the Clothing sector consolidates, Online pure plays and Multichannel retailers are making opportunistic moves on distressed brands (e.g. Arcadia).

Market composition

• The announcement of a third national lockdown on 4 January, which came into effect the following day, saw the closure of non-essential retailers once more.
• A rapid rise in the number of infections caused by the newly identified Covid-19 strain caused anxiety amongst some shoppers.
• Retail sales fell by 1.7% year-on-year in January, according to the Retail Economics Retail Sales Index (value, NSA, ex. Fuel).
• However, there was a significant shift towards online as consumers reverted seamlessly to lockdown shopping behaviour.

Permanent shift to online

• Just under a third of consumers (32%) believe their shopping habits will change on a permanent basis as a direct result of Covid-19.
• There is a clear correlation with income – with wealthier households displaying the greatest propensity for permanent change. The highest income households are almost twice as likely to spend more online after the pandemic compared with the least affluent households.
• 57% of consumers are either confident about their personal finances or have seen their personal finances improve due to the pandemic.

2021 Outlook

• Retail Economics forecasts Clothing (25.9%) & Footwear (29.5%) sales to rebound strongly over 2021.
• Online channels will grow at a slower pace than 2020, but there has still been a significant step change in the proportion of sales occurring online.
• M&A and strategic brand partnerships will be a key trend to watch out for in 2021 as retailers look for opportunities to quickly scale up their online proposition.

Consumers shift to supermarkets and online channels for lockdown clothing purchases