The Thread: The Silver Lining in bricks and mortar
With lots talk of high streets in decline due to the overpowering growth from online sales, the mantra of 2017 was a constant scare that the “high street is dead”. However, the New Year brings somewhat renewed hope and the latest Kantar Worldpanel data shows that 2018 is not all doom and gloom for bricks and mortar. Instead, growth might be found in places where the fashion market least expects it.
There is no question that footfall has been challenging, even after Christmas. Sales from shops are declining, down 2.4% on last year, but not all types of shops are having a hard time. Retail parks and outlets are outpacing the fashion market (growing 2.9% and 3.5% respectively). In sharp contrast, high street shops are declining 4.3% year on year.
So why the stark performance differences?
Firstly, consumers are more likely to destination shop than impulse buy as household budgets continue to be squeezed. At shopping centres and high streets, clothes shops compete with restaurants, cinemas and home furnishing shops - all areas that are growing faster than fashion. At retail parks, consumers who plan to go there for a day of shopping will have to take public transport or drive to get there additionally, fashion retailers in these locations are only competing with one another for spend rather than with a whole host of other options.
Secondly, retail parks and outlets cater to value-sensitive shoppers, whereas the high street or shopping centres may not necessarily do so. The fastest-growing retailers in the top 10 fashion retailers in the UK are the value based fashion retailers, with growth driven mainly by attracting new shoppers. Shoppers feel they can trust these retailers to provide good value, especially as they go from strength to strength establishing their style credentials.
Although outlets may be more expensive than value fashion retailers, they benefit from the nature of the current market where promotions drive growth. Our latest 12 week data shows that the discounted market is growing at 5.1% compared to full-price sales which are growing 3.3%. Discounted sales are behind the new shoppers, despite shallower promotions on offer, as consumers seek out deals when buying.
The last reason retailers should be looking to stores for growth is due to a slowdown in online sales. Last year saw online growth peak at about 10% annually whereas February has seen this slow to 7%. With such a strong performance from online last year, it may be difficult for retailers to meet their year on year performance measures. This is especially evident since online growth benefitted from stealing spend from stores, so as the online market begins to slow, that stolen spend will start to balance out.
While the market this year begins to see signs of recovery, retailers should ensure that they are well placed to take advantage and invest wisely in the right channels. Value for money should always be in the forefront of retailers’ minds as they follow shopper trends, but it’s important to remember that online does not take precedence in fashion sales; instore purchases still account for 70% of sales. While the high street may still be a concern, there are other ways retailers can take advantage of footfall opportunities.
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Client Manager Kantar Worldpanel Fashion
- Send a messageStephanie Money