Online fashion retail sales fall by 30% in US and Europe

Apr 10, 2020

Revenues have fallen by more than 30% for online fashion retailers in the US and Europe says a new report by Nosto. The platform tracked the performance of fashion, apparel and accessories eCommerce merchants from March 1st to 25th, 2020. It then compared it with the same time period in 2019. The data is based on the performance of 271 merchants that use the Nosto platform in the UK, US, Germany, France and Sweden.

The report, ‘Effects of the Covid-19 Outbreak on Fashion, Apparel, and Accessory Ecommerce’ noted the March year-on-year drop entirely due to the coronavirus epidemic. The epidemic has seen cities and countries across the globe locked down to curb the rise of the virus in the population. However, the report noted traffic did not drop by as much, suggesting consumers are still prepared to browse for fashion. There was a slight uptick in performance after the lowest point on 20 March. This suggests that retailers might be reacting and adjusting in the short-term.

 

Online fashion retail sales figures drop

According to the analysis, visits, number of orders, and total sales across all countries started dropping noticeably around 7 March. The worst performing day was 20 March, when sales revenue overall was down 32% and visits were down 24%. Average Order Value (AOV) declined by 6% while conversions were down by 9%. On this day, US sales dropped 27%, but traffic only dropped by 9%. This was the largest gap between sales and traffic of any region.Matt Levin, Nosto’s Global Head of Marketing

“Since that low-point on 20 March, the data shows some signs of a recovery beginning. Sales revenue and visits are slowly recovering in all countries. Conversion rates are staying relatively the same,” said Matt Levin, Nosto’s Global Head of Marketing. “Increased traffic with stable conversion seems to mean these new shoppers are still buying at typical rates. This could be a result of merchants reacting with discounts and merchandising shifts, or consumer behaviour simply stabilising. As things continue to develop we will continue to monitor what is happening.”

Reconnecting with customers

Jake Chatt, Head of Brand Marketing at Nosto has noticed ways in which brands are trying to connect with customers. Some brands are shifting their messaging and strategy to align with what’s going on in the world. “Having real-time updates on stock availability or current shipping times can help shoppers feel informed when everything seems so uncertain. Some brands are highlighting or showcasing products and collections relevant to people’s current at-home lifestyles. This can alleviate the stress of trying to find new items that they didn’t think they’d be looking for two weeks ago. For example, leisure clothing could be something a lot of shoppers are currently looking for. Alternatively, new at-home office needs. Finally, we’ve been seeing some brands connect with shoppers on an even more human level. Some brands have set up funds or donations for medical needs or those who have been put out of work due to the outbreak.”

In the UK, consumer confidence fell by two points in March as the lock down continues. Analysts have suggested confidence can only further deteriorate as the coronavirus crisis continues. GfK’s Consumer Confidence Index fell to -9 last month. However, the market research firm stressed that the analysis took place in the first two weeks of March. – Coronavirus had made the headlines, but had not yet impacted the day-to-day lives of UK consumers.
In other retail sectors, florists and horticultural businesses have literally seen their revenues disappear into the compost heap. While supermarkets and grocers are flourishing and reporting record online sales.

Enterprise Times: What this means for retailers?

Nosto took a snapshot of data from the recent activity of some fashion and accessory ecommerce brands. The company sought to learn how vertical sectors are faring during the Coronavirus outbreak. The company thought these insights could help inform the fashion eCommerce industry in a way that helps navigate the chaotic landscape of the market during these difficult times. Different retailers are being affected by the COVID-19 outbreak in vastly different ways.

Luxury brands will be best positioned to weather the storm and any economic downturn and changes in consumer behaviour. High product margins should enable them to buffer a possible recession. However, many mainstream online brands and retailers across the globe will struggle. Some online retailers such as TK Maxx has already stopped taking online orders during the current outbreak.

Other retailers including Primark, Edinburgh Woollen Mill Group (EWM) and New Look have written to suppliers to cancel orders until further notice. German-based Zalando has warned revenue and gross merchandise value growth in the first quarter will fall below analyst’s expectations. The company acknowledges consumers will reduce spending during the coronavirus pandemic.

According to the Nostos report, many retailers are reacting and recovering in the short-term (likely at the expense of margin). However, for online fashion retailers, with slim margins and fierce competition, it will be a tough road ahead. But is there a way forward?

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Photo by Lauren Fleischmann

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