Early July 2020, Euromonitor published revised forecasts for Apparel and Footwear for 2020-2024 that considered the implications of the novel coronavirus COVID-19. Overall, COVID-19 is expected to severely suppress global demand for Apparel and Footwear in 2020, but the virus’ effects are expected to be markedly different across different categories and channels. A strong rebound is expected in 2021, but pre-Covid-19 revenues are not expected to be fully recovered until 2022.
Apparel and Footwear global retail revenue estimates for 2020 have been downgraded by USD319 billion. The industry is expected to post double digit decline in 2020 as a result of global retail lockdowns. Lower than expected footfall across most markets after reopening, has evaporated any hopes for “v-shaped” or swift recovery during H2 2020.
Despite higher than average e-commerce penetration, Covid-19 has exposed serious retail inefficiencies within the apparel and footwear space. Several big profile apparel and footwear retailers have gone bankrupt over the last quarter, and many others are expected to follow. On the other hand, players with a highly developed digital presence and those operating on a DTC basis have navigated the crisis best.
Standstill of business travel and working from home arrangements have impacted formal apparel and footwear in a greater extent. Men’s and Women’s Suits are among the worst performing categories. Limited social interaction within the context of social distancing and the delay of celebrations of all sorts have added further pressure on already struggling categories pre-Covid-19.
The combination of skyrocket inventory levels and record low sales have pushed the vast majority of brands and retailers into discounting frenzy. The strategy has proved unsuccessful during Q3 with most consumers still wary to spend on non-essential references despite more favourable pricing. As seen post-2008 financial crisis, weaning consumers away from this always on discount habit is challenging, risky in terms of brand equity and detrimental for profit margins.
Covid-19 is having a widespread effect across all markets and categories. Yet, Q3 has untapped though some pockets of growth. Value for money fashion propositions, off-price retail, e-commerce and DTC operators have proved to be way better equipped to navigate the downturn.
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