Stats: How fashion ecommerce has changed since Covid-19

The Covid-19 pandemic has been a difficult time for fashion retailers as a whole – in 2020, UK clothes sales fell by a whopping 25%. However, even in a sector that already had a relatively high degree of ecommerce penetration, post-pandemic the shift to online has been notable.

This roundup includes studies and financial results that show how fashion ecommerce is evolving, including cross-border sales, fast fashion growth, and how inventory sizes have changed. We’ll be adding to this roundup on a monthly basis to include the latest research that has caught our eye.

UK online clothing sales expected to overtake in-store in 2022

According to an October 2021 report from Retail Economics and Eversheds Sutherland, online sales of clothing rocketed by £2.7 billion over the course of the pandemic, but total sales fell by £9.6 billion. As a result, the dramatic shift to ecommerce in this category over the past 18 months has meant online clothes shopping could overtake in-store purchases by as soon as next year, ahead of previous expectations that it would happen in 2025.

If this occurs, Britain would be the first European nation where the majority of clothing is bought from online sources. The next closest market – the Netherlands – isn’t due to cross this threshold until 2025, while Germany and France aren’t predicted to do so until several years after that.

The permanency of the shift to online clothes shopping is most potent among British consumers, with more than one-third (36%) stating they would stick with their changes in habits brought about by the pandemic. This is compared to an average 31% of consumers across the rest of Europe.

While online-only apparel retailers will no doubt benefit from this moving forward, there are grave predictions for lost revenue in in-store locations. Among the four European countries analysed, the report indicated that clothing stores will lose €8 billion in total sales per year thanks to new online shopping habits.

54% of online shoppers in the UK have become more price-sensitive towards fashion purchases since the start of the pandemic

Although online shopping has boomed since the onset of coronavirus, it appears consumers have grown accustomed to the heavy discounting which was used as a tactic to stimulate demand during lockdowns when fashion sales declined. As a result, fifty-four percent of UK-based online shoppers have become more price-sensitive towards fashion purchases since the start of the pandemic, new data from antuit.ai has found.

Markdowns over the last year and a half have prompted online shoppers to discover a wider range of products and migrate to alternative brands. This is still true for many – 6 in 10 now say they would be more likely to try new clothing ranges when a discount has been applied. Meanwhile, price incentives have also had a positive impact on CLV among fashion brands, with 54% of respondents confirming that they had gone on to purchase at least one other garment at full price after initially purchasing a discounted one.

While there may be increased demand for discounting as shoppers look to bag a bargain, there are signs that the practice of slashing prices is down among retailers, including those in the fashion sector. Some put this down to continued fractures across the international supply chain, while others also cite economic pressures including an overall rise in cost of goods which has been passed on to the consumer.

Pandemic ecommerce boost sees Shein’s valuation double to £21 billion as it becomes the world’s largest online-only fashion retailer

Chinese-owned, online-only fast fashion retailer Shein has more than doubled its valuation year-on-year thanks to unprecedented growth during the pandemic. In a recent 2021 assessment, Shein has been valued at an equivalent £21 billion, up from £10 billion last year, crowning the brand as the largest online-only fashion retailer in the world.

Present in 220 regional markets, according to reporting from the Retail Gazette, the company has seen a surge of more than 81 million app downloads globally in the first half of 2021 alone. It is becoming increasingly popular in the US, with the app periodically topping the mobile download chart since the onset of the coronavirus. Bloomberg has noted that Shein became the most downloaded shopping app in the US in May – ending Amazon’s 152-consecutive-day streak – calling it a “remarkable feat for any seven-year-old clothing brand”. Since then, the two retailers have been in close competition for the monthly top spot.

While Shein does not officially disclose its revenue, Forbes estimates the company generates more than US$10 billion annually (~£7.3 billion), with sales soaring even further throughout the course of the pandemic.

One quarter of shoppers purchased apparel from websites outside of their home country in 2020

Data from eShopWorld shows one quarter of shoppers (surveyed across 11 countries) purchased apparel from websites outside of their home market in 2020, rising to 31% among younger consumers in the Gen Z and Millennial age brackets. This marks apparel as the most sought-after ecommerce product, cross-border.

This is despite the fact that UK online clothing sales over much of the course of last year, with a few exceptions, have been much lower than levels seen before the pandemic. As a result, these figures from eShopWorld highlight the importance of offering and investing in cross-border ecommerce capability for clothing retailers, particularly as they begin recovering post-Covid.

Footwear was the next most popular product, with 15% of shoppers making an international purchase of this category, while children’s clothing came third (14%).

In Singapore, 36% of consumers bought apparel from outside of their home market, making it the top global market for cross-border online clothing purchases in 2020, according to analysis. This was followed by Russia (32%), Chile (31%), France (29%) and Mexico (28%).

So far, total cross-border ecommerce is up 74% year-on-year from data reported in the first four months of 2021, implying that momentum amongst international shoppers is still very high.

61% of fashion retailers say they are planning to reduce the number of SKUs in their inventories

The pandemic’s impact on the fashion industry, particularly in store, has led to significant amount of left over stock and periods of heavy discounting by retailers as they try to shift it, greatly affecting overall revenue. A December 2020 report from Business of Fashion and McKinsey observes the ways fashion retailers are making fundamental changes to their strategies going into 2021 to resolve the issues that have been brought to light more plainly than ever before.

When asked what strategies they would employ to avoid future overstock, 61% of fashion retailers said they were planning to reduce the number of SKUs in their inventories. A further 60% hope to improve analytics for consumer insights so that they can better predict demand, while 55% said they would implement a more agile supply chain.

Combined with other methods such as moving to a seasonless assortment and reducing the number of collections they produce, these retailers hope to make their business operations more cost effective and environmentally friendly moving forward.

Farfetch’s two-year GMV growth reaches 97% in Q3 2021

Thanks to a spike in luxury purchases over the past 18 months, online luxury fashion marketplace Farfetch has seen even further growth as 2021 comes to a close. Its two-year pre-to-post pandemic GMV uplift is proof of this huge appetite, growing by 97% as of Q3 2021, and up from 82% in Q2. According to Farfetch, this was driven largely by a select few key luxury markets, including the USA, China and the UK among others – all of which more than doubled GMV in their regions over the same period.

To continue meeting this demand, its top 20 third-party e-concession partners have expanded their stock by 75% year-on-year, according to Farfetch’s latest financial statement. Consequently, the amount of stock available via the brand’s digital platform has now reached more than 10 million units.

Farfetch’s top 100 brand and boutique partners are clearly continuing to see a positive return from their presence in the marketplace, despite a general dip in global ecommerce activity. It reported a 100% retention rate among these key sellers across the past 3 years of trading.

Overall, the brand posted a year-on-year revenue increase of 33.1%, rising from $437.7 million in sales during Q3 2020 to $582.6 million in Q3 2021. Of this, Farfetch’s Digital Platform Revenue grew by 26.5%.

China’s annual luxury online penetration increased from 13% in 2019 to 23% in 2020

A post-Covid boom in China’s luxury market could result in 48% growth by the end of 2020, according to a report from Bain. If the results reflect this, total luxury sales for the year could reach 346 billion RMB, and as growth continues, mainland China is likely to have the largest share in the luxury market sales by 2025.

Much of this growth has been spurred on by younger consumers in the Millennial and Gen Z cohorts, who are much more likely to use the internet to research and purchase luxury goods than their more mature counterparts. Gen Z is the only generation to cite online sources for all three of their top three favourite places to research luxury fashion. China’s annual luxury online penetration increased by a total 10 percentage points between 2019 and 2020 alone to 23%, driven by these changes in shopping habits.

As of October 2020, luxury beauty ecommerce sales had grown by 60% alone since the same month the year before, making a particularly popular luxury vertical amongst Chinese consumers. More impressively, luxury fashion and lifestyle ecommerce sales in China saw an equivalent increase of 100%, although this started at a relatively small base in 2019 due to overseas purchases having been preferred up until this point.

Ecommerce penetration is still quite low for luxury fashion and lifestyle in China– it’s predicted to grow from 5% in 2019 to 7% in 2020 – whereas penetration in luxury beauty far outstrips any other category (expected growth 28% in 2019 to 38% in 2020).

Bain believes online luxury retail has changed permanently since the onset of the coronavirus pandemic, with most brands predicting online penetration of the sector in China to reach anywhere between 20%-25% within the next three years.

UK consumers more likely to buy clothing online than any other product post-pandemic

Despite the poor sales in the clothing and apparel sector (both online and offline) over the last year, UK consumers are more likely to buy clothing through online channels than any other product category post-pandemic. This is according to a spring 2021 report from MiQ.

Appetite for online fashion is, unsurprisingly, highest in 18-25 year olds, with 51% of the cohort stating they were more likely to buy clothing after the coronavirus crisis subsides, compared to 50% of consumers aged 26-35 and 40% of those ages 56-65. Although interest in online fashion falls in correlation with age, all cohorts cited clothing as their top category for online shopping after the pandemic.

Consumers of all age groups also ranked beauty, personal care and consumer electronics as other products they were more likely to purchase online in the future. Meanwhile, a substantial 34% of over 65s stated they aren’t interested in shopping for any of the 8 listed product categories online once life returns to normal. This suggests that new digital shopping behaviours will be less permanent for this age group in the long-term than they will be for their younger counterparts.

The high interest in shopping online for clothing post-pandemic indicates that brick-and-mortar high street retailers in this sector could continue to struggle, even once all restrictions are lifted in physical spaces. Now more than ever, multichannel fashion brands must ensure they create enticing offline experiences to capture footfall.

Boohoo reports record £976 million in sales in 6 months to August 2021, doubles market share in two years

Boohoo Group has reported revenue of £976 million in the 6 months to August 2021, according to a recent press release from the brand. This figure is a 20% increase on its interim report the year before, during which the company saw huge growth in online orders amid the coronavirus crisis. These most recent H1 results remain a massive 73% above pre-pandemic sales.

Over the past two years of trading, this means the group has in fact doubled its market share in both the UK and the US.

However, despite the rapid evolution of the brand, ongoing supply chain and fulfilment issues, currently of concern to many online and multichannel retailers, are starting to take effect and could pose a further threat to its H2 2022 margins. As a result of this and a substantial £172 million in new investments, Boohoo’s pre-tax profits were 20% lower in the six months to August 2021 compared to the same period last year.

‘Elevated short-term cost headwinds experienced in the first half are expected to continue in H2 alongside recent freight inflation in our supply chain and wage inflation within our distribution centres,’ the statement read. ‘Consequently, adjusted EBITDA margins are now expected to be 9% to 9.5%, compared to 9.5% to 10% as previously guided.’

The fast-fashion retailer says it expects a 20-30% revenue uplift in the second half of this financial year, equating to a 20-25% full-year growth overall despite complications.

Inditex’s H1 2021 online sales rebounded further to beat pre-pandemic levels by 137%

Inditex, owner of well-known fashion retailers Zara, Pull&Bear and Bershka (among others), has published its H1 and Q2 2021 financial results, which show both online and offline sales have rebounded substantially to beat pre-pandemic levels.

Total revenue across all channels for the first half of 2021 reached €11.94 billion, a figure that is up 49% year-on-year, as consumers began shopping for outfits amid steady global reopening. Online sales during this period grew by 36% versus H1 2020, or by 137% compared to the first half of 2019, before the pandemic.

This strong omnichannel performance has been gradually improving throughout the year, with sales between the beginning of August and the beginning of September rising 22% year-on-year – equivalent to a +9% growth on the same month of 2019. While it is expected that in-store sales will see increased revenue now that its stores are back to business as usual, its online channels are still raking in sales. In fact, Inditex’s branded websites and apps are expected to account for more than a quarter of the Group’s revenue for the full year.

This comes as the Group continues to implement its two-year digital transformation plan, which sees €1 billion earmarked for digitisation and a further €1.7 billion dedicated to streamlining an integrated in-store and online platform across its brands.

International online sales of luxury goods increased by 170% year-on-year in August and September 2020

International online sales of luxury goods increased by 170% year-on-year in August and September 2020, according to analysis from eShopWorld.

As retail begins its slow recovery on a global scale, the cross-border luxury market appears to be faring well following sales performance in July 2020 that was 40% above those seen in the lead up to Christmas 2019 (a period which is usually the strongest in the calendar alongside new year discounts).

Luxury has been one of the most hard-hit sectors of the industry as consumers rein in their spending and focus on essential items throughout the pandemic. The closure of physical stores, as well as shoppers’ reluctance to splash out and other unpredictable online behaviours has caused experts to predict drops of 40-60% in experiential luxury and 25%-45% in personal luxury sales year-on-year.

Despite this gloomy outlook, the late summer growth figures indicate that brands are altering their marketing strategies to prioritise digital, thereby bringing luxury online experiences to those outside of their usual domestic markets. CEO of eShopWorld, Tommy Kelly, explained, “In the current climate, there is incredible opportunity for luxury beyond the traditional channels and markets, particularly as older shoppers have become more comfortable with online, while digital natives are, of course, already there.”

Indian online fashion marketplace Myntra sees record 19 million visitors to its site on first day of its annual Big Fashion Festival 2021

Indian online fashion marketplace Myntra, owned by Walmart, has said it saw a record 19 million visitors to its website on the first day of its annual Big Fashion Festival 2021.

Around 20% were first-time users of the platform, equating to approximately 3.8 million shoppers, far above the brand’s estimates prior to the event which were benchmarked at 1.1 million across the week-long event.

According to a report from Business Standard, 600,000 products were sold in the first hour alone. Before the promotion began, the brand also saw a 43% uplift in the number of customers who had wishlisted items, reaching 8.6 million active customers. Together, they favourited a whopping 83.6 million items.

Beauty and personal care was the most popular category of the day, with sales up 190% compared to the start of the same event the year before. Accessories and sports apparel were the next biggest verticals for sales growth, recording 80% and 75% increases respectively.

The pandemic has seen a rapid uptake of online and mobile commerce in India. Statistics from IBEF show that the country’s ecommerce order volume grew by 36% in 2020, while the total market is predicted to reach $18.2 billion by 2024 (a CAGR of 57%). These figures from Myntra prove what big ecommerce brands have to gain in the region and emphasises the magnitude of the shift in consumer behaviour.

Lululemon revenue rose 61% year-on-year in Q2 2021

A transcript of the latest financial figures from fitness apparel brand Lululemon shows revenues rose 61% year-on-year in Q2 2021. This increase is thought to have been driven by continued demand for clothing like leggings that are both comfortable for home and practical for workouts, despite the reopening of shops, events and public spaces. Total revenues rose to $1.45 billion from 902.9 million the year before.

This quarterly result smashed experts’ estimates and has brought about a revised upward outlook for earnings across the full year. The company is now predicted to surpass its 2023 revenue target by the end of 2021, thanks in part to the shift to online shopping seen in the past 18 months.

Online sales for the brand rose a further 4% during the three months to June, on top of the 157% increase in Q2 2020, demonstrating it has been able to retain many new digital customers since the peak of the first wave. Given that a hugely successful online warehouse sales event took place in Spring 2020, which was not repeated this year, the brand has done an even better job at maintaining ecommerce momentum.

Since the start of the pandemic, Lululemon has implemented a number of enhancements to its mobile and desktop sites, including the expansion of payment methods, better predictive search and a more seamless checkout process. These have no doubt aided strong online sales performance and customer retention throughout the first half of the year.

Next online sales up 36% year-on-year over Christmas period 2020

Online sales for the UK fashion and department store Next were up by 36% year-on-year over the nine weeks to 26^th December 2020, it announced in January. As a result, total full-price sales were just 1.1% down on the same period in 2019, as online sales compensated for profit lost from closed brick-and-mortar stores.

The week commencing 6^th December saw the consumers purchase the most via Next’s online channels, reaching nearly £80 million in total value, before dropping off slightly the week after, suggesting that much of the public opted to get their Christmas shopping done earlier than usual (as predicted).

Childrenswear, loungewear, sportswear and home were the top performing online categories over the festive period, while workwear and occasionwear were, naturally, the least popular among Next customers. The company also reported returns rates were much lower than usual at 21% compared to 35% during the same nine weeks of 2019.

Next says it predicts full-price product sales to decline by 14% over January in the midst of another national lockdown. However, it has adjusted its forecast pre-tax profit from £365 million (estimated in October) to £370 million for the full year.