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Online Apparel, Accessories Sales Will Grow Just 8.6% This Year

The effects of COVID-19 have been felt throughout retail over the past few months across the globe, and one market research company thinks it will take at least two years to rebound, and as many as five years for physical retailers.

According to eMarketer’s latest forecast on U.S. retail sales including automotive and fuel, total retail sales will drop by 10.5 percent in 2020 to $4.89 trillion, even steeper than the 8.2 percent drop seen in 2009 during the Great Recession. Brick-and-mortar retail sales will fall 14 percent this year to $4.184 trillion, with the losses anticipated to take up to five years for offline sales to return to pre-pandemic levels.

E-commerce is the only obvious bright spot, which will jump 18 percent this year to reach $709.8 billion, up from prior a eMarketer forecast of 13 percent, as more shoppers swarmed online when stores were closed.

Despite forming the second-largest e-commerce category in overall sales, apparel and accessories couldn’t catch the wave many other sectors capitalized on throughout the pandemic—and will grow just 8.6 percent as consumers shifted spending away from discretionary categories. To contextualize how slow apparel growth is, the top-growing e-commerce categories will be food and beverage at 58.5 percent and health/personal care/beauty at 32.4 percent. However, apparel is a more mature category online, one potential factor behind the flagging growth forecast.

Apparel retailers on the whole just haven’t been able to capture a major share of U.S. e-commerce. Of the top 10 online retailers by market share, Macy’s ranked No. 10 at 0.9 percent market share, and is the only retailer selling apparel that isn’t a mass merchant, warehouse club or marketplace. Amazon, the most-shopped retailer for apparel, according to Coresight Research, leads the way at 38 percent. Walmart is ranked second at 5.8 percent, eBay is No. 3 at 4.5 percent, Target comes in seventh at 1.5 percent and Costco takes the No. 8 spot at 1.3 percent.

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Total retail sales will not rebound to 2019 levels until 2022 and estimates throughout the forecast period will be lower than previously predicted, eMarketer said.

“This is the sharpest consumer spending freeze in decades in the U.S.,” said Cindy Liu, eMarketer senior forecasting analyst at Insider Intelligence. “In just a couple weeks, as Americans sheltered in place, retail sales fell dramatically in March. With sales hitting their lowest point of the year in Q2, it will take years before consumer activity returns to normal levels.”

Week-over-week store foot traffic in the U.S. increased every week from the week of April 19-25 to the week of May 24-30, with the final seven-day span seeing a 17.5 percent foot traffic gain, according to data from retail intelligence firm Springboard. However, the week of May 31-June 6 saw the first week-over-week foot traffic decline since April at 10.6 percent.

In-store foot traffic overall still has a long way to go to reach any semblance of pre-pandemic levels, with foot traffic declining 83.6 percent year-over-year on the week of May 31-June 6.

Through the pandemic, since the week of March 15-21 when nonessential retailers began closing stores, average weekly foot traffic in the stores that remained open plummeted 83.8 percent.

The U.K. has a long road back, too

While the U.S. Census Bureau will release its official May monthly retail sales totals on June 16, the British Retail Consortium (BRC), a trade association for U.K.-based retailers, unveiled monthly stats from across the pond supporting the notion that the industry still has a long road ahead to bouncing back from the pandemic. The association indicated that total retail sales throughout the country decreased by 5.9 percent in May, still a deeper loss than the 1.9 percent dip in May of last year.

This is the second-worst decline recorded since the BRC started monitoring sales in January 1995, but still an improvement over April’s 19.1 percent sales loss. The number is above the three-month average decline of 9.4 percent from March through May, but below the 12-month average decline of 2.6 percent.

When excluding temporary store closures, U.K. retail sales increased 7.9 percent in May, well ahead of the 2.2 percent decrease in May 2019.

And although essential retailers remained open throughout the pandemic, they probably weren’t selling much of any item that wasn’t food or a household staple. From March through May, in-store sales (excluding food) declined 50.3 percent year over year, much worse than the 12-month total average decline of 14.8 percent.

“Many non-essential categories—especially fashion—continued to attract limited demand, which will increase the pressure on them in the coming months,” said Paul Martin, U.K. head of retail at KPMG. “As restrictions ease, retailers have much to consider during the pandemic’s recovery phase. Stores may soon have the greenlight to reopen but it will be a gradual affair with safety front of mind, and some doors may not reopen at all. COVID-19 has acted as an accelerant in the shift towards having less of a physical presence, not least due to the obvious need to radically reduce costs for survival.”

Helen Dickinson OBE, chief executive of BRC, noted that despite online sales (excluding food) increasing by 60.2 percent in May, retailers have many challenges and concerns to address going forward.

“While the month showed record growth in online sales, many retailers will be anxious to see whether demand returns to our high streets when non-essential shops reopen June 15,” Dickinson said. “Weak consumer confidence and social distancing rules are likely to hold back sales. Furthermore, there are concerns that if government support is withdrawn too quickly, shops and businesses will not survive. Until the situation improves, retailers urgently need support on rents and negotiations with their landlords as high fees could force some physical retailers to shut for good.”

Springboard data indicates that U.K. foot traffic has increased week-over-week in the past five weeks, from the week of April 26-May 2 to the week of May 31-June 6, with the final week seeing a 4.2 percent foot traffic gain.

Overall, U.K. year-over-year foot traffic hasn’t suffered quite as much as the U.S., but still saw drastic declines of 67.5 percent in the May 31-June 6 period. Since the week of March 22-29 when nonessential retailers began closing stores in the U.K., year-over-year weekly foot traffic in stores that remained open dropped 75.8 percent.