LONDON — British fashion sales have fallen in what Kantar Worldpanel is calling the sector’s steepest decline since 2009, according to figures released by the research group.
Kantar said in the fiscal year ended Sept. 25, shoppers spent almost 700 million pounds, or $861 million at current exchange, less, on clothing, shoes and accessories, with a particular decline in the last four months of the period. The company said the decline was caused by consumers buying goods less frequently, resulting in fewer interactions with retailers.
“Most recently, the decline has been driven by falling frequencies of buying, giving retailers fewer opportunities to encourage shoppers to part with their cash,” said Glen Tooke, consumer insight director at Kantar Worldpanel. “As such, (retailers) need to ensure that stock availability is as high as it can be — online and offline — and that the shopping experience is based on what the customer actually wants, not what the retailer thinks they should experience.”
Tooke said Kantar’s latest figures do not take into account the closure of BHS, which shut its doors for the last time at the end of August. “The retailer was worth over 400 million pounds ($487 million) in sales, so if this spend isn’t reapportioned throughout the market, then we’ll be seeing the decline continue. Only 10 of our top fashion retailers are worth more than the 700 million pounds which the market has lost, so this decline is equal to one of them disappearing from our high streets. Given the events of this summer this no longer seems impossible.”
Over the summer, BHS closed its doors after the ailing company failed to find a buyer. A day after BHS entered administration earlier in the year, the men’s wear retailer Austin Reed announced it was also seeking protection from creditors, and subsequently shut its doors.
The unpredictable weather, the advent of online shopping, changing consumer patterns and a struggling men’s formalwear market weighing on many of the country’s high street stalwarts. The collapse of BHS was the U.K.’s biggest retail failure since that of Woolworths in 2008.
Kantar said retailers it surveyed are “following the same patterns of overbuying and deep discounting,” and retailers have responded to the current environment by “investing less.” As a result, shoppers are hesitant to pay full price. Kantar noted that retailers could address these issues “more proactively” and instead of looking at “micro-trends,” they should shift their focus and understand exactly what the consumer wants.
Meanwhile, data from Euler Hermes, a trade credit insurer, suggests that the depreciation of the pound will continue to trigger further challenges for British companies because many goods that are eventually sold in the U.K. are sourced from abroad, leading to “upward pressure on costs and prices, mitigating any benefits for exporters.”
The result of this includes a tight cash flow with profits “likely to worsen payment behavior, as companies try to preserve working capital by extending payment terms and deadlines as sterling depreciates and domestic activity slows.”
The credit insurer stated that the repercussions of late payments on U.K. business will “be doubly felt in a ‘hard leave’ Brexit scenario” resulting in an increase in bankruptcies.