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Fashion is Thriving
Retailers invariably don’t declare a breakdown between their online and instore revenue, making it difficult to precisely determine the biggest players in terms of eCommerce sales.
However, as ASOS has no physical presence, we know that its £2 billion online turnover is accurate – it’s likely that it is in fact the biggest player in eCommerce fashion within the UK. The pressure is certainly on for retailers to improve their online presence; in 2018 Next experienced an 8% slump in sales, but it also saw a 4.7% increase in the number of shoppers going online (which accounted for more than half of its turnover).
Similarly, Arcadia suffered a loss of £505 million in 2018, and is now focusing its efforts to expand online – the company has recently partnered with eCommerce retailer Shop Direct to list Topshop and Topman brands for the first time to help compete with ASOS, Next and others.
The Pressure is on for Retailers
2020 will certainly be a challenging year for retailers. Already, there’s been a decrease in consumer confidence, according to market intelligence company GFK. Since the Brexit referendum we have witnessed a long succession of negative confidence scores with the overall trend downwards.
Confidence is an important indicator which typically increases as the economy expands and decreases when the economy contracts. The UK certainly has a long way to go to match the record low Index score of -39 witnessed during the early days of the last recession. If a hard Brexit happens, which is looking more and more likely, then the UK may well enter into a protracted and long recession.
Major chains including Karen Millen, Jack Wills, Bathstore, Patisserie Valerie and Debenhams have gone into administration this year after the collapse of House of Fraser, Evans Cycles, Maplin and Poundworld in 2018. Some of those chains are still in business, taken over by new operators after their collapse, but have closed physical stores.
Many other retailers, including Topshop owner Arcadia, Monsoon, New Look, Carpetright and Homebase have been forced to seek legal agreements with their landlords to shut stores and slash their rent bills to stave off insolvency.
The biggest threat to the UK eCommerce market in 2020 is Brexit, with European and worldwide buyers moving their purchases to other markets. With only a few weeks to go, it is still uncertain whether the UK will exit with a deal or not, and potentially another extension.
