2018 to be another tough year for fashion retailers - GlobalData

By

Sandra Halliday

Published
May 8, 2018

It may not come as a shock, but analysts are predicting another grim year for the UK fashion retail sector in 2018. Following a volume decline for clothing and footwear of 0.8% last year, growth isn't expected to return until next year, leaving 2018 weak.

That's according to GlobalData, which said Tuesday that higher manufacturing and import costs, due to the prolonged weakness of the pound, led to a sharp 2.4% hike in inflation last year and proved “a hindrance to volume growth as higher prices were passed on to consumers.”

While inflation has already started to slow and is forecast to continue softening this year, the research firm also said that “budgets will remain under pressure and shoppers will still be unable to afford further price hikes, minimising the opportunity for volume recovery.”

And of course, any consumer appetite for fashion does seem to have been dented by cold snowy weather at the start of the spring shopping season. 

But the inflation slowdown will be a key development with GlobalData saying that it should soften all the way to 2023, helping to support volumes, despite a shift to more cautious spending.
 
That cautious spending is characterised by consumers trying to get more mileage out of the clothes they already own, which will mean fashion retailers will struggle to generate growth, unless they're online.

Senior retail analyst Mamequa Boafo said: “The prioritisation of leisure spending and preference for experiences over ‘stuff’ will see consumers shopping from their own wardrobes this year, utilising what they have already and only buying clothing items they can truly justify spending money on. However, forecast growth in online clothing & footwear is high at 10.8% for 2018, second only to the health & beauty sector. 

“As store footfall remains weak, maximising online opportunities to drive sales and customer acquisition is vital – with multichannel players needing to invest to keep up with online pureplays such as Asos and Booho, which continue to set the standard in fulfilment and online shopping experience.”