Clothing Retailing: Inc Impact of COVID-19 - UK - October 2020

OVERVIEW 
Key issues covered in this Report
COVID-19: market context
Economic and other assumptions
Products covered in this Report
EXECUTIVE SUMMARY
Impact of COVID-19 on clothing category
Figure 1: Short, medium and long-term impact of COVID-19 on clothing, 3 November 2020
The market
Appetite for clothing declines dramatically
Figure 2: Consumer spending on clothing and accessories, 2015-25 (prepared on 5 November 2020)*
Specialists see deepest declines
Figure 3: Retail sales through specialist clothing retailers, 2015-25 (prepared on 3 November 2020)
Online clothing sales jump in 2020
Figure 4: Online sales of clothing and accessories, 2015-20
Companies and brands
Next remains leading specialist
Figure 5: Leading specialist retailers: compound annual growth in revenues, 2015-19
M&S loses trust, while Next and Primark seen as innovative
Figure 6: Attitudes towards and usage of selected clothing brands, February-September 2020
Adspend revives following lockdown slump
The consumer
People feel uncomfortable trying on clothes in-store
Figure 7: Changing priorities since COVID-19, 10-17 September 2020
Surge in sportswear purchasing
Figure 8: Outerwear items purchased in the last three months, June 2019-September 2020
Consumers more likely to have bought online than in-store
Figure 9: How consumers have bought clothes for themselves in the last 12 months, August 2020
Amazon competes for lead with M&S
Figure 10: Retailers used to purchase clothing in the last 12 months, net of retailers used to purchase in-store and/or online, August 2020
Buying new clothes becomes less of a priority
Figure 11: Changes in clothes shopping behaviour since COVID-19, August 2020
Value for money dominates
Figure 12: Most important factors when choosing which clothes to buy, August 2020
Young prefer to buy from brands that promote diversity
Figure 13: Clothes shopping behaviour, August 2020
Adapting stores in a time of COVID
Figure 14: Clothes shopping behaviour in-store once clothes stores have reopened following COVID-19 lockdown, August 2020
ISSUES AND INSIGHTS
Impact of COVID-19 on the clothing market
Who are the winners and losers in clothing?
Adapting to a new fashion retail reality
THE MARKET – KEY TAKEAWAYS
Dramatic decline in clothing sales in 2020
Gradual recovery 
Specialists see deepest declines
Consumer confidence remains volatile
MARKET SIZE AND FORECAST
COVID-19 leads to a drop in appetite for clothing
Figure 15: Short, medium and long-term impact of COVID-19 on clothing, 3 November 2020
Lockdown
Re-emergence
Recovery
Dramatic decline in clothing sales in 2020
Figure 16: Consumer spending on clothing and accessories, 2015-25 (prepared on 5 November 2020)*
Figure 17: Consumer spending on clothing and accessories, at current prices, 2015-25
Continued anxiety impacts footfall
Gradual recovery
Market drivers and assumptions
Learnings from the last recession
Figure 18: Consumer spending on clothing and accessories, 2008-12
Forecast methodology
MARKET SEGMENTATION 
Underwear market gains share 
Figure 19: Estimated breakdown of consumer spending on clothing and accessories, 2020
Figure 20: Estimated % breakdown of consumer spending on clothing and accessories, 2018-20
SECTOR SIZE AND FORECAST 
Specialists see deepest declines
Figure 21: Retail sales through specialist clothing retailers, 2015-25 (prepared on 3 November 2020)
Figure 22: Retail sales through specialist clothing retailers, at current prices, 2015-25
Polarised recovery
Market drivers and assumptions
Clothing sales through specialist clothing retailers
Figure 23: Sales of clothing and accessories through clothing retailers, 2015-20
Source: ONS/Mintel
CHANNELS OF DISTRIBUTION
COVID-19 increases shifts in where people shop for clothing
Specialists hardest-hit sector of COVID-19 pandemic
Department stores also underperforming
Growing sectors
Figure 25: Estimated distribution of consumer spending on clothing, by type of retailer, 2019
Figure 26: Estimated distribution of consumer spending on clothing, by type of retailer, 2015-19
MARKET DRIVERS
Clothing falls into deflation
Figure 27: Consumer price inflation, 2009-19
Footwear inflation drops further in September 2020
Figure 28: Consumer price inflation, August 2019-September 2020
Real wage growth falling
Figure 29: Real wages growth: wages growth vs inflation, January 2016-August 2020
Consumer confidence remains volatile
Figure 30: Mintel financial confidence tracker, January 2018-August 2020
Consumers saving more
Figure 31: Trends in what extra money is spent on, September 2019 and September 2020
Rates of obesity high among women
Figure 32: Overweight and obesity prevalence in UK population, by gender, 2014-18
Increase in young will benefit clothing market
Figure 33: Trends in the age structure of the UK population, 2019-29
Consumers spending more time online due to COVID-19
Figure 34: Online activities done in the last three months on any device, June 2019 and June 2020
ONLINE
Online clothing sales grow by 26% in 2020
Figure 35: Online sales of clothing and accessories, 2015-20
Where they shop online
Figure 36: Retailers used to purchase clothing online in the last 12 months, August 2020
COMPANIES AND BRANDS – KEY TAKEAWAYS
Next remains leading specialist but Primark surpasses M&amp;S
Online players benefit from shift online
Face masks present new category for retailer
ASOS stands out as the most trusted pureplay
LEADING SPECIALISTS
Next remains leading specialist but Primark surpasses M&S
Figure 37: Leading specialist retailers: net revenues, 2015-19
Clothing specialists show polarised performance over the past five years
Figure 38: Leading specialist retailers: compound annual growth in revenues, 2015-19
COVID-19 forced struggling retailers to close stores
Figure 39: Leading specialist retailers: Outlet numbers, 2015-19
Sales per outlet
Figure 40: Leading specialist retailers: estimated annual sales per outlet, 2015-19
Sales area and sales densities
Figure 41: Leading specialist retailers: total sales area, 2015-19
Figure 42: Leading specialist retailers: estimated annual sales per square metre, 2015-19
Operating profit and margins
Figure 43: Leading specialist retailers: operating profits, 2015-19
Figure 44: Leading specialist retailers: operating margins, 2015-19
LEADING NON-SPECIALISTS
Sports retailers
Department stores
Supermarkets are major players
Online retailers
Figure 45: Leading non-specialists: estimated clothing and footwear revenues, 2015-19
MARKET SHARES
Figure 46: Leading retailers’ estimated share of spending on clothing and footwear, 2015-19
Change in market shares
Figure 47: Leading clothing retailers, change in share of clothing spending, 2015-19
LAUNCH ACTIVITY AND INNOVATION
Retailers strengthen ecommerce
Hush reveals new ecommerce website with mobile-first design
Mango launches virtual chatbot
Morrisons launches dedicated website for own clothing brand Nutmeg
Retailers help consumers shop safely
Missguided teams up with InPost UK to offer contact-free click-and-collect service
Phase Eight offers in-store personal styling appointments
ASOS accelerates AR clothes fitting service
Diesel unveils digital showroom Hyperoom
Figure 48: Diesel’s digital selling platform and showroom, 2020
Sustainability
Timberland’s first sustainability concept store
Figure 49: Timberland’s sustainability store on Carnaby Street, 2020
Selfridges launches Project Earth
Figure 50: The Restory at Selfridges, 2020
Connolly launches upcycled collection pop-up at Portobello Market
Puma unveils new Dope Dye Technology
Figure 51: The Puma X CSM collection, 2020
Resale and rental fashion
Liberty enters rental market in collaboration with My Wardrobe HQ
Figure 52: My Wardrobe HQ pop-up at Liberty, 2020
Selfridges partners with HURR Collective in first designer fashion rental collection
Oxfam opens second-hand shop in Selfridges for #SecondHandSeptember
Figure 53: Oxfam pop-up at Selfridges, 2020
Pop-ups
Lone Design Club reveals shoppable window
Figure 54: Lone Design Club shoppable window, 2020
Burberry launches digital and in-store ‘Animal Kingdom’ pop-ups
Figure 55: Burberry’s Animal Kingdom collection, 2020
Ted Baker teams up with Creative Mentor Network to celebrate store reopening
Figure 56: Ted Baker ‘Nice To See You, To See You Nice’ slogan, 2020
Face-covering launches
Burberry to launch luxury face masks costing £90
Figure 57: Burberry’s face masks, 2020
Sainsbury’s Tu sells face coverings for adults and children
Figure 58: Sainsbury’s Tu family pack of face masks, 2020
Christopher Kane launches free face mask craft packs
Figure 59: Christopher Kane free face masks, 2020
Brands launch matching masks for outfits
Figure 60: Designer Samantha Cameron’s matching dress and face mask for brand Cefinn, 2020
Retailers repurpose factories as part of COVID-19 relief effort
Mulberry delivers PPE to hospitals
Reiss repurposes supply chain to produce face masks
Mackintosh uses factory in Nelson to produce nurse uniforms
Primark donates to NHS
M&S providing pyjamas for NHS workers
Kurt Geiger donates shoes to NHS staff and first month of store profits from 15 June
Net-A-Porter helps deliver essentials to those in need
Launches and store openings
Morrisons opens Nutmeg clothing standalone store
Morrisons launches website for Nutmeg
Figure 61: Morrisons Nutmeg store, 2020
Forever 21 enters UK with online store
Missguided launches lockdown-inspired range
Figure 62: Missguided lockdown-inspired range, 2020
ADVERTISING AND MARKETING ACTIVITY
Sector advertising spend down 8.5% year-on-year in 2019
Figure 63: Total recorded above-the-line advertising expenditure on clothing and accessories, 2015-19
Advertising spend back to pre-pandemic level following COVID-19 lockdown slump
Figure 64: Total recorded above-the-line advertising expenditure on clothing and accessories, by month, January-July 2019 and 2020
Shein is the biggest spender despite spending half of what it did in 2018
Figure 65: Total recorded above-the-line, online, display and direct mail total advertising expenditure on clothing and accessories, by leading spenders, 2015-19
Outdoor and TV share of advertising spend increasing as dominant digital begins to decline
Figure 66: Total recorded above-the-line advertising expenditure percentage on clothing, by media type, total market, 2019
2020 campaign highlights
Shein’s first out-of-home advertising campaign
Marks & Spencer digitally focused athleisure campaign and first ever denim TV advert
Matalan new brand positioning campaign
Freemans’ new website, app and exclusive clothing collection
John Lewis advertises its spring/summer season on TV for the first time ever
BRAND RESEARCH
Brand map
Figure 67: Attitudes towards and usage of selected brands, February-September 2020
Key brand metrics
Figure 68: Key metrics for selected brands, February-September 2020
Brand attitudes: ASOS seen as innovative
Figure 69: Attitudes, by brand, February-September 2020
Supermarket clothing brands seen as accessible
Figure 70: Brand personality – Macro image, February-September 2020
JD Sports viewed as stylish and responsive
Figure 71: Brand personality – Micro image, February-September 2020
Brand analysis
M&amp;S loses trust, while Next and Primark seen as innovative
Supermarket clothing brands seen as offering good value
ASOS stands out as the most trusted pureplay
Gap seen as overrated
THE CONSUMER – KEY TAKEAWAYS
People are spending less on fashion
Younger generations favour buying online, but also visit stores
Amazon competes for lead with M&amp;S
New clothes and fashion trends become less of a priority
Value for money dominates
IMPACT OF COVID-19 ON CONSUMER BEHAVIOUR
Over a quarter are worse off since COVID-19…
Figure 72: Change in financial situation since COVID-19 outbreak, 25 June-7 August 2020
…with women most concerned
Figure 73: Fears around the negative impact COVID-19 will have on people’s lives, by gender, 18-24 June 2020
People are spending less on fashion…
Figure 74: Consumer spending habits since COVID-19, 10-17 September 2020
…but there has been a notable increase in online purchases
Figure 75: People shopping more online since COVID-19, 16 April-17 September 2020
People feel uncomfortable trying on clothes in-store
Figure 76: Changing priorities since COVID-19, 10-17 September 2020
Growing usage of face masks 
Figure 77: Face masks and scrunchies, September 2020
Figure 78: Agreement with usage of face masks/coverings in different situations, 10-17 September 2020
WHAT THEY BUY
Appetite for fashion falls
Figure 79: Fashion items purchased in the last three months, June 2019-September 2020
Surge in sportswear purchasing
Figure 80: Outerwear items purchased in the last three months, June 2019-September 2020
Most consumers only buy one or two items
Figure 81: Number of clothing items purchased on most recent shopping trip, June 2019-September 2020
Big decline in consumers spending £75 and over
Figure 82: Trends in amount spent on clothing, June 2019-September 2020
HOW THEY SHOP
Consumers more likely to have bought online than in-store
Figure 83: How consumers have bought clothes for themselves in the last 12 months, August 2020
Younger generations favour buying online, but also visit stores
Figure 84: How consumers have bought clothes for themselves in the last 12 months, by generation, August 2020
Young women continue to shop, while young men cut back
Figure 85: People who have bought clothes for themselves in-store and/or online or have not bought clothes in the last 12 months, by gender and age, August 2020
WHERE THEY SHOP
Specialists most popular, but pureplays growing
Figure 86: Types of retailers used to purchase clothing in the last 12 months, by channel, August 2020
Amazon competes for lead with M&S
Figure 87: Retailers used to purchase clothing in the last 12 months, net of retailers used to purchase in-store and/or online, August 2020
Primark retains popularity despite lack of online site
Figure 88: Retailers used to purchase clothing in the last 12 months, by channel, August 2020
People shop at fewer retailers
Figure 89: Repertoire of retailers used to purchase clothing in the last 12 months, by channel, August 2020
CUSTOMER PROFILES
Next sees increase in male customer base
Figure 90: Retailer customer profile, by gender, August 2020
ASOS loses youngest shoppers
Figure 91: Retailer customer profile, by age, August 2020
Figure 92: Retailer customer profile, by socio-economic group, August 2020
CHANGES TO CLOTHES SHOPPING SINCE COVID-19
Buying new clothes becomes less of a priority
Figure 93: Changes in clothes shopping behaviour since COVID-19, August 2020
Younger Millennials shun trendy fashion
Figure 94: Changes in clothes shopping behaviour since COVID-19, by generation, August 2020
Baby Boomers worry about visiting stores
Figure 95: Changes in clothes shopping behaviour since COVID-19, by generation, August 2020
MOST IMPORTANT FACTORS WHEN BUYING CLOTHES 
Value for money dominates
Figure 96: Most important factors when choosing which clothes to buy, August 2020
Young online shoppers want more inclusive and diverse models
Figure 97: Most important factors when choosing which clothes to buy, by how people have bought clothes in the last 12 months, August 2020
CLOTHES SHOPPING BEHAVIOUR
Younger generations cut back the most…
Figure 98: Clothes shopping behaviour, August 2020
Figure 99: Agreement with statement ‘Concerns about money in the last 12 months have caused me to cut back on buying clothes’, by generation, August 2020
…but prefer to buy from brands that support causes and promote diversity
Figure 100: Agreement with statements ‘I prefer to buy clothes from brands that support important causes than those that don’t’ and ‘I would be put off buying clothes from a retailer that doesn’t promote diversity’, by generation, August 2020
Young buy clothes to look good online
Parents of under-18s buy more clothes on discount
Figure 101: Clothing Retailing – CHAID – Tree output, August 2020
Methodology
Figure 102: Clothing retailing – CHAID – Table output, August 2020
CLOTHES SHOPPING IN-STORE AT A TIME OF COVID-19
Comfort with in-store shopping depends on age
Figure 103: Clothes shopping behaviour in-store once clothes stores have reopened following COVID-19 lockdown, August 2020
Adapting stores in a time of COVID
Figure 104: Agreement with statements ‘I have visited a clothing store’, ‘I feel comfortable going shopping for clothes in-store’ and ‘I think social distancing is being done properly in stores’ now that stores have reopened, by age, August 2020
Women think it is pointless to visit stores without fitting rooms
ARCADIA
What we think
Arcadia closes more stores and plans restructure post-COVID-19…
…Westfield Stratford is to close after lease expires…
…but Topshop on Oxford Street to remain open after £310 million refinancing
Arcadia furloughs 14,500 staff and execs face 50% pay cuts
Snapchat teams up with adidas and Topshop in new ecommerce initiative
Company background
Company performance
Figure 105: Arcadia Group: Group financial performance, 2014/15-2018/2019
Figure 106: Arcadia: Outlet data, 2014/15-2018/19
Retail offering
GRUPO INDITEX
What we think
A global business
Upsizing stores
Online a big opportunity for growth
Technology at the heart of the business
Flexible and responsive approach to production helped it cope with COVID
Sustainability is key to future
Where now?
Company background
Company performance
Figure 107: Grupo Inditex: Group financial performance, 2015/16-2019/20
Figure 108: Grupo Inditex: Sales by brand, 2019/20
Figure 109: Grupo Inditex: Outlet data, 2015/16-2019/20
Figure 110: Grupo Inditex: Outlet numbers by brand, 2019/20
Retail offering
H&M HENNES & MAURITZ
What we think
New hyper-local store concept
Custom-made perfect fit jeans
Online expansion giving more customers more options to access its brands
Livestreaming shopping events
Fashion rental and re-sale point towards an increased focus on sustainability
Company background
Company performance
Figure 111: H&M Hennes & Mauritz: Group financial performance, 2014/15-2018/19
Figure 112: H&M Hennes & Mauritz: Outlet data, 2014/15-2018/19
Retail offering
MARKS & SPENCER
What we think
Clothing delivered with groceries
Drive-through fashion service
Online instalment payment option to help spread the cost of buying fashion
Wider choice of brands to broaden customer appeal
Shifting focus away from formalwear range to contemporary everyday fashions
Eradicates alpaca wool from products
Company background
Company performance
Figure 113: Marks & Spencer: Group financial performance, 2015/16-2019/20
Figure 114: Marks & Spencer: Outlet data, 2015/16-2019/20
Retail offering
NEXT GROUP
What we think
Location of stores has been key
Greater shift towards online
Product mix benefited from bias to sports and loungewear
Growing focus on beauty
Next ups its ante on underwear
Where next
Company background
Company performance
Figure 115: Next Group: Group financial performance, 2014/15-2019/20
Figure 116: Next Group: Outlet data, 2014/15-2019/20
Retail offering
PRIMARK/PENNEYS
What we think
Missing out on online sales costs the brand millions in lost revenue
A must-visit destination for consumers shopping for clothes in-store
Cut-price fashion
New eco-conscious fashion, homeware and beauty collection
First ever sportswear collaboration
Company background
Company performance
Figure 117: Primark/Penneys: Group financial performance, 2015/16-2019/20
Figure 118: Primark/Penneys: Outlet data, 2015/16-2019/20
Retail offering
RIVER ISLAND
What we think
‘Buy now, pay later’ online option
Needs to do more to get customers back through the door
Commits to being more transparent
Exclusive childrenswear collaboration with TV star and personality Samantha Faiers
Own-brand beauty offering
Company background
Company performance
Figure 119: River Island Holdings Limited: Group financial performance, 2015-19
Figure 120: River Island Holdings Limited: Outlet data, 2015-19
Retail offering
TK MAXX UK
What we think
A mountain of unsold stock to choose from
Knockdown prices
Giving clothes a second chance
Company background
Company performance
Figure 121: TK Maxx UK: Group sales performance, 2015/16-2019/20
Figure 122: TK Maxx UK: Outlet data, 2015/16-2019/20
Retail offering
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
APPENDIX – MARKET/SECTOR SIZE AND FORECAST
Forecast methodology