June’s retail sales figures from the ONS were a wake up call for clothing and footwear specialists. Sales were down for the month yoy, -7.2% by value and -6.1% in volume on last year. The fashion sector has seen a consistent fall in yoy growth since last December. So, weak sales cannot purely be blamed on reduced confidence over Brexit and unseasonal weather. It has been a clear trend for some months now, characterised by chronic overcapacity and record levels of price promotions.
Last year June was a strong month for the sector with sales of £4.6bn. This year’s sales were £400m lower. A feature of the current market is weakening volumes. In the past, price promotions have shifted product and lower margins were compensated by faster stock turns. Seven consecutive months of declining volumes is driving the most promotional market we have ever seen. But price cutting isn’t working.
Our Promotional Tracker highlighted that for most fashion retailers, Summer sales started week commencing 20th June. That week 84% of fashion retailers went on a sale, a significant increase from 59% the week before. Five weeks later (this week) we recorded 75%, still a very high number and underlining the continued need to shift slow moving Summer stock at discounted prices. Some retailers resisted starting their Summer sales too early – Next only launched its sale last week, while M&S delayed its Summer sale by 2 weeks compared to last year, starting on the 5th July.
So what needs to change? Retailers need to focus on their core customer demographic, making it easier and more relevant to shop, and eliminate loss making or slower moving parts of their offer. We have recently seen some fashion retailers editing ranges – there needs to be much more of this. Choice is a function of relevance, not quantity.
** We advise management teams in and around retailing on strategy, analytics and forecasting. Get in touch if you think we can help Richard@richardtalksretail.co.uk