Clothing and footwear retailers emerge unscathed from Christmas 2022 but will be hit by reduced consumer spending.
GlobalData analysis finds that the apparel sector avoided what was expected to be a bleak Christmas period in 2022.
Despite the effects of the cost-of-living crisis and postal strikes, multichannel clothing and footwear retailers saw increased sales. While partly boosted by price rises, retailers who offer in-store and click-and-collect services excelled.
Marks & Spencer saw its UK clothing & home sales rise by 8.8% in the 13 weeks to 31 December.
JD Sports was another beneficiary. Its global group revenue rose by over 20% in the six weeks to 31 December. Although growth will likely have been lower in the UK, it is a clear outperformer, boosted by consumer appetite for branded sportswear and the 2022 FIFA Men’s World Cup.
A key trend in the apparel sector was the channel shift. This was due to the impacts of the postal strikes in the UK. Online pure plays bore the brunt of this as they had to bring their final order dates forwards to guarantee delivery by Christmas and other carriers became overwhelmed.
This contributed to Asos’ UK group revenue and the boohoo group’s UK group revenue falling by 8.4% and 11.1% respectively in the four months to 31 December.
GlobalData retail analyst Emily Salter states that “These declines can partly be attributed to the normalisation of shopping behaviours. Omicron forced many shoppers to switch online last Christmas. Additionally, many consumers are falling out of love with fast fashion. They are now seeking apparel that represents greater value for money.”
However, fast fashion still offers support for consumers struggling with the cost-of-living crisis. Indeed, Primark had a strong Christmas, with its UK sales rising 15% in the 16 weeks to 7 January.
Consumers’ discretionary incomes and savings will become increasingly stretched and depleted. As a result, low prices will increasingly trump other drivers of retailer choice.
While most apparel retailers pulled through Christmas 2022, some spend will have been protected by consumers willing to splash out on the first festive period without COVID-19 restrictions since 2019. Many will likely cut back in Q1 of 2023.
“2023 will be a tough year for the UK apparel sector, as many consumers start to run out of savings. This will be compounded by a lack of government help as they feel the full force of higher energy bills, with the market forecast to fall by 5.1%,” says GlobalData retail analyst Emily Salter.
“Although the pressures on
retailers’ margins and consumers’ incomes will start to ease in the second half
of the year, there will be casualties. The upper mass market is especially set
to be squeezed as consumers trade down and struggle to justify higher price
By Just Style