4
BDO LLP | RETAIL FORECASTS REPORT 2021
RETAIL CATEGORY GROWTH FORECASTS
HEALTH & BEAUTY
CLOTHING & FOOTWEAR
Clothing & footwear has been hit particularly hard by the COVID-19 pandemic. Consumers have deprioritised non-essential items due to the economic uncertainty and a lack of social events, leading to a significant drop in volumes, while some deflation has also occurred as retailers have been forced to apply greater discounts in order to clear excess stock. Examples include earlier reports such as H&M sitting on £3.4bn of unsold merchandise as of late April and Burberry announcing it would have to clear excess stock through discounting, staff sales, donating to charities and recycling. All stores closed again for Lockdown two. Even when open, restrictions such as closed fitting rooms, queues, and the wearing of masks, as well as fear of contracting the virus, it continues to detract consumers from visiting, so online shopping will retain its appeal, especially as many work from home and can easily receive deliveries. Online pureplays such as ASOS and Boohoo have particularly capitalised from this channel shift. Moreover, consumers are likely to remain cautious about visiting non-essential stores for the foreseeable future, leading to a slow recovery for the market; while growth of 28.7% in 2021 may seem bullish, this will still see £2.5bn less spent on the sector than in 2019 and the lowest amount since 2014. Accessories will be the worst hit subsector, as these items are the least essential and spend is often driven by impulse add-on purchases instore. Childrenswear is forecast to be the most resilient clothing subsector, as the need for replacement purchases is higher, due to children quickly outgrowing and wearing out their clothes. Footwear is expected to perform slightly worse than clothing during 2020, as consumers left their houses significantly less than normal during lockdown. Spend has been driven by trainers and indoor footwear, with sports retailers such as JD Sports and Sports Direct gained significant market share.
Health & beauty retailers have been somewhat protected by the need for everyday essentials during the COVID-19 pandemic. Consumer stockpiling started in late February, with paper products, bathroom toiletries and over the counter (OTC) medicines all benefitting throughout March and into April. Though buying behaviour has since normalised, heightened demand for hand soaps and gels has remained, as handwashing is central to infection control. Consumers are also remaining keen to manage their own ailments with OTC medicines and further protect themselves via vitamins and supplements. 2020 has not been without its sales opportunities in beauty as, owing to the temporary closure of salons and spas, consumers found themselves acting as their own beauticians, hairdressers, barbers, and manicurists, with at-home beauty and grooming treatments in demand. The transfer of spend online has already caused businesses to revise their strategy, with Next and Harrods opening new bricks and mortar beauty formats to secure support from big brands, which will then enable them to stock brands online and sell them at scale digitally. Online pureplays, including ASOS and specialists such as The Hut Group, also continue to expand their presence in the category. However, the impact of the pandemic on beauty sales has been mostly negative, with consumers’ shopping habits and beauty routines radically changed. With reduced social calendars and the significant shift to working from home that many have experienced, many consumers see little reason to purchase beauty products. Concern over finances has also proved off-putting for many, with plenty making do using what they have, unswayed by the plentiful discounts available across the beauty category. With a revised sense of priorities, consumers are also set to continue limiting their spend on non-essentials next year, especially as widespread homeworking is set to remain popular well into 2021, which will negatively impact demand for fragrance and cosmetics in particular.
Made with FlippingBook HTML5