Data: Fashion stores to lose £15bn in sales by 2025

Research by Retail Economics and multinational law firm Eversheds Sutherland predicted the accelerated shift to online shopping would result in a €17.6bn (£14.9bn) slump in sales at clothing stores across the next five years.

The Future of the European Apparel Industry report found that store-based sales of clothing would fall €2.8bn (£2.4bn) in 2021 compared to 2020 levels, with declines accelerating every year between now and 2025 as more shoppers move online. 

Retail Economics predicted annual losses of in-store fashion sales would hit €4.3bn (£3.6bn) in the UK by 2025 and €11.5bn (£9.75bn) across the UK, France, Germany and the Netherlands. 

The predicted declines come amid the shift to online shopping during the coronavirus crisis. According to Retail Economics, online fashion sales will overtake those raked in through stores in 2022 – three years earlier than is pre-pandemic prediction. 

Fifty-two per cent of all apparel transactions in the UK will take place online next year, the economics consultancy said. Only a third of UK shoppers (35%) said they would not return to stores with the same frequency as they visited them pre-pandemic, which is likely to lead to a swing in the spending pendulum from physical to digital.

Younger shoppers in particular revealed a willingness to buy more online as we emerge from the pandemic. Retail Economics chief executive Richard Lim said stores will therefore need to be “repurposed and reimagined” to become a “powerful driver of online sales rather than competing against them”.  

Lim said: “Stores will play multiple roles to become much more than a point of transaction. Some stores will function as immersive showrooms or ‘brand bonding’ centres where customers can discover and interact with products, while others will operate as convenient fulfilment hubs geared towards click-and-collect and returns. Either way, the continued fusion of physical and digital realms will be key.

“Fewer stores are inevitable, but those that are left will be a much better fit for the future. When executed correctly, physical stores can become powerful customer acquisition tools, complementing online channels whilst simultaneously offering unique and meaningful customer experiences that strengthen brand loyalty.”

Eversheds Sutherland partner James Batham added: “The industry needs a transformation in planning, policy and skills to avoid billions of pounds of sales and thousands of jobs being lost. Retailers will have to alter the way they use commercial real estate and the customer experiences they deliver. They have to bring people back to the high street, and not just from across the UK, but from across the globe.

“Whereas reforming business rates is well debated, removing the friction of shopping in the UK for overseas consumers is not. Exemptions for international shopping areas have been discussed for London but what about in tourist hotspots across the UK? Reform on shopping visas, Sunday trading and tax-free shopping are highly likely to generate more revenue through sales for the government than they will through tax.

“These no-cost options should be considered as the UK looks to establish itself as an international retail market outside of the EU.”