Since the outbreak of the epidemic, fashion retailers have also been "forced" to experience the cold winter period of the industry. In 2020, clothing sales in the UK fell sharply by 25%. In the post-epidemic era, retailers are more actively embracing online channels, and even in an industry where e-commerce penetration is relatively high, such a large-scale "shift in position" is quite eye-catching.
This paper will combine research and analysis to present the evolution of the fast fashion industry in recent years through cross-border sales, sales growth and changes in inventory scale.
It is hoped that it will provide market information reference for excellent cross-border sellers in China, judge the hour and size up the situation, and jointly welcome the new spring of the industry.
#1 It is expected that by 2022, online clothing sales in the UK will surpass physical stores
According to a October 2021 report by Retail Economics and Eversheds Sutherland, UK online channel apparel sales soared £2.7 billion during the pandemic, but overall sales fell by £9.6 billion.
Over the past 18 months, the channel migration of the apparel industry means that online clothing sales may surpass physical stores as early as next year, or even exceed the previously expected level of 2025.
If that happens, the UK will be the first European country with the largest sales of online clothing. It is closely followed by the Netherlands, but it is not expected that the country will be expected to break through this threshold until 2025. Germany and France are also scrambling to keep up with Britain's Big Brother.
More than a third (36%) of UK consumers say they will stick to the changes in spending habits brought about by the pandemic. By comparison, consumers in the rest of Europe average only 31%.
"With the strength of the good wind, send me to the clouds." Under the wind of the times, retailers are undoubtedly very profitable. However, it is predicted that physical store revenue will face a significant reduction. The report notes that in the four European countries analyzed, physical clothing stores will lose 8 billion euros in total sales per year due to the emergence of a new trend of online shopping.
#2 SHEIN doubled its valuation to become the world's largest online fashion retailer
Due to the unprecedented growth during the epidemic, Chinese online fast fashion retailer SHEIN broke through the siege, and its valuation more than doubled year-on-year. In its most recent 2021 assessment, SHEIN's valuation soared to £21 billion from £10 billion last year, making the brand the world's largest online fast-fashion retailer.
According to the Retail Gazette, in the first half of 2021 alone, the company saw a surge of more than 81 million app downloads in 220 regional markets around the world. As it grew in popularity in the U.S. market, the app has long topped the mobile download charts. Bloomberg noted that in May, SHEIN became the most downloaded shopping app in the United States, ending Amazon's record of the most downloaded 152 consecutive days, and said that its achievements are "quite jaw-dropping for any 7-year-old clothing brand." And it seems that since then, the two retail giants have been fiercely tearing up for the monthly championship.
While SHEIN did not formally disclose its financial position, Forbes estimates that the company generates more than $10 billion (£7.3 billion) in annual revenue. During the epidemic, sales have not regressed, but have soared further.
#3 Cross-border sea shopping may become a new trend
According to eShopWorld, in 2020, 25% of shoppers (surveyed in 11 countries) bought clothing on websites outside their home markets, rising to 31% among younger consumers of Gen Z and millennials. This marks that clothing has become the most popular cross-border e-commerce product.
Most online clothing sales in the UK last year were well below pre-pandemic levels, but that's still the case. As a result, eShopWorld's data also highlights the importance of providing cross-border e-commerce capabilities to apparel retailers and investing in them.
At the same time, footwear is the second most popular cross-border product, with 15% of consumers preferring it. Children's clothing ranked third (14%).
According to the data, 36% of consumers in Singapore buy clothing from abroad, making the country the world's largest cross-border online clothing purchase market in 2020. It was followed by Russia (32%), Chile (31%), France (29%) and Mexico (28%).
As of now, the total amount of cross-border e-commerce has increased by 74% year-on-year compared with the data of the first four months of 2021, which means that the momentum of overseas consumption is still very strong.
#4 The number of SKUs or an appropriate reduction
The impact of the epidemic on the fashion industry, especially on stores, has led to a large amount of surplus inventory, and retailers often offer significant discounts when cleaning up inventory, which has greatly affected the overall revenue of the industry. In a December 2020 report by Business of Fashion and McKinsey, fashion retailers are making fundamental changes to their 2021 strategies to address developments that are becoming more prominent than ever.
When asked what strategies they would adopt to avoid future excess inventory, 61 percent of retailers said they would reduce the number of SKUs in their inventory; another 60 percent wanted to improve consumer analytics to better anticipate market demand; and 55 percent said they would look for or build more flexible supply chains. At the same time, retailers will also combine other methods, such as moving to non-seasonal categories or reducing the number of production volumes, and their business operations will be more cost-effective and environmentally friendly.
#5 In the post-pandemic era, UK consumers' demand for online clothing purchases far exceeds that of other categories
Despite poor sales in the apparel industry (online and offline) last year, after the pandemic, UK consumers are more likely to buy clothing through online channels than any other category of products – according to MiQ's Spring 2021 report.
18-25-year-olds have the highest interest in online fashion, with 51% saying they are more likely to buy clothes when the crisis subsides. In contrast, 50% of consumers aged 26-35 and 40% of consumers aged 56-65 have this intention. Although interest declines with age, all respondents listed clothing as the preferred category for post-pandemic online shopping.
Consumers of all ages also list beauty, personal care and electronics as other products they are more likely to shop online in the future. Meanwhile, 34 percent of people over the age of 65 said they had no interest in buying the products listed above online once life returned to normal — suggesting that in the long run, the impact of new digital shopping behaviors in that age group is not as lasting as it is for younger generations.
The strong interest in online shopping in the wake of the pandemic suggests that even if the lockdowns are lifted, brick-and-mortar retailers in the sector may continue to struggle. Today, more than ever, multi-channel fashion brands are ensuring a premium offline experience to attract foot traffic.
According to #6 Boohoo, its sales reached £976 million in the six months to August 2021, doubling its market share in two years
According to a recent press release issued by the brand, Boohoo Group revenue was £976 million as of August 2021. Up 20 percent from the mid-year before, the company received a huge increase in online orders during the pandemic. The latest results for the first half of the year show that this is even 73% higher than pre-pandemic sales.
In the last two years of transactions, this means that the group's market share in the UK and the US has actually doubled.
However, despite the brand's rapid growth, the ongoing supply chain and fulfillment issues that many online and multi-channel retailers are currently focusing on are beginning to take effect and could pose a further threat to its profit margins in the second half of 2022. As a result, coupled with a £172 million investment injection, Boohoo's pretax profit fell by 20% year-on-year in the six months to August 2021.
The headwinds of rising short-term costs in the first half of the year are expected to continue in the second half of the year, while supply chain freight rates are rising and distribution center labor costs are also rising. As a result, adjusted EBITDA margins are currently expected to be 9% to 9.5%, compared to the previous index of 9.5% to 10%.
The fast-fashion retailer said it expects revenue to grow 20-30 percent in the second half of the fiscal year, equivalent to an overall full-year increase of 20-25 percent.
#7 Inditex's online sales in the first half of this year were 137% higher than pre-pandemic levels
Inditex, which owns well-known fashion retailers such as Zara, Pull & Bear and Bershka, announced its financial results for the first half of 2021, showing that online and offline sales have rebounded sharply, exceeding pre-pandemic levels.
As the global market steadily picked up, consumers began to buy clothing. In the first half of 2021, the company's total revenue across all channels reached €11.94 billion, up 49% year-on-year. Online sales during this period increased by 36% compared to the first half of 2020 and 137% compared to the first half of 2019 before the pandemic.
This strong omnichannel performance has been gradually improving so far this year, with sales up 22% year-on-year from early August to early September, equivalent to a 9% increase in the same month of 2019. Although its stores are back to normal operations and in-store sales revenue is expected to increase, its online sales are still growing rapidly. In fact, Inditex's branded websites and apps are expected to account for more than 25% of the Group's full-year revenue.
The group will continue to advance its two-year digital transformation plan, of which €1 billion will be spent on the digitalization process and another €1.7 billion will be used to streamline the integration strategy of its brands.
#8 International luxury online sales up 170% year-on-year
According to eShopWorld's analysis, in August and September 2020, international online sales of luxury goods increased by 170% year-on-year.
The retail sector is slowly recovering globally, with the multinational luxury market appearing to be doing well, with sales in July 2020 40% higher than Christmas 2019.
Throughout the pandemic, luxury goods have been one of the most affected categories due to consumer control over spending and a focus on the necessities of life. Physical store closures, consumer reluctance to spend money and other unpredictable online behavior have led experts to predict that experiential and personal luxury sales will decline by 40-60% and 25%-45% year-on-year.
Despite the gloomy outlook, summer growth data suggests that brands are changing their marketing strategies to focus on digitalization to bring luxury online experiences to consumers abroad. Tommy Kelly, CEO of eShopWorld, explains: "In the current environment, luxury has incredible opportunities outside of traditional channels and markets, especially as older consumers become more comfortable with online shopping, while digital natives of other age groups have long been fixed."
#9 The Myntra website in India reached a record 19 million visits
Myntra, an Indian online fashion market owned by Walmart, said its site reached a record 19 million visits on the first day of its site's 2021 Big Fashion Festival.
About 20 percent are first-time registered users of the platform, equivalent to about 3.8 million potential consumers, well above the brand's pre-event pre-event, and the brand's benchmark was 1.1 million in a week-long marketing campaign.
According to a report by Business Standards, the platform sold 600,000 products in the first hour alone. Before the promotion began, the number of customers on the shopping list also increased by 43%, with a total of 8.6 million active customers, and they had a total of 83.6 million items in their collection.
Beauty and personal care were the most popular categories of the day, with sales up 190% from the same period last year. Accessories and sportswear were the second largest verticals for sales growth, up 80 percent and 75 percent, respectively.
In this sudden epidemic, online mobile commerce in India has risen rapidly. According to IBEF, China's e-commerce order volume increased by 36% in 2020, and the total market size is expected to reach $18.2 billion by 2024 (compound annual growth rate of 57%). Myntra's data proves that large e-commerce brands can reap the rewards and highlights the importance of shifting consumer behavior.
#10 Lululemon's Q2 2021 revenue increased 61% year over year
Lululemon, a fitness apparel brand, shows that revenue for the second quarter of 2021 increased 61% year-over-year. Consumers believe that despite the reopening of shops, events and public places, the demand for comfortable and practical clothing at home, such as leggings, continues to grow. Total revenue increased to $1.45 billion from $902.9 million last year.
This quarterly result broke expert expectations and revised the full-year earnings outlook. The company now expects to exceed its 2023 revenue target by the end of 2021, thanks in part to the shift to online shopping over the past 18 months.
In the three months to June, the brand's online sales grew a further 4 percent, outpacing the 157 percent increase in the second quarter of 2020, suggesting that the brand has been able to retain many new online customers since the first wave of sales spikes. Considering that there was a very successful online clearance event in the spring of 2020, the brand has performed better at maintaining the momentum of e-commerce.
Since the beginning of the pandemic, Lululemon has made a number of improvements to its interactive interface, including expanded payment methods, better predictive searches, and a seamless checkout process. There is no doubt that these initiatives contributed to strong online sales performance and customer retention in the first half of the year.
#11 During last Christmas, Next online sales increased 36% year-over-year
In January, British brand Next announced that its online sales had increased by 36% year-on-year in the nine weeks ended December 26, 2020. As a result, total full-price sales fell by only 1.1% compared to the same period in 2019, as online sales compensated for the loss of profits from physical store closures.
Starting on 6 December, consumers bought a number of things through Next's online channel with a total value of nearly £80 million, with a slight decline the following week, suggesting that most members of the public chose to complete their Christmas shopping earlier than usual.
During the holiday season, children's wear, casual wear, sportswear and homewear are the most popular online product categories, while workwear and casual wear are naturally the least popular among Next customers. The company also reported a 9-week return of 21 percent over the same period in 2019, well down from 35 percent in previous years.
Next said it expects non-discounted product sales to fall 14 percent in January due to another nationwide lockdown. However, the company has adjusted its full-year pretax forecast to £370 million from £365 million (expected in October).
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