Between June and September 2016, something hit UK clothing stores that I don’t think’s ever happened in the history of selling clothes, anywhere, ever before.
The internet’s share fell, consistently.
Britain’s Office for National Statistics (ONS) had earlier reported that the internet accounted for 13.3% of all clothing stores’ national sales in the previous quarter (April-June).
As in just about every quarter since the ONS began monitoring this in late 2013, that share was up on the previous quarter and up on the same quarter the previous year. For years practically the only thing you can rely on in our industry (apart from weather that’s not right for selling clothes) has been that remorseless internet growth.
But over the past three months, it seems to have gone into reverse. The June-Sept share (12.7%) was below the 13.3% of the previous quarter – and unchanged from the 12.7% we saw in June-Sept 2015.
What’s happening? The phenomenon marks a few rarely noticed features of selling clothing these days.
1. Specialist clothing stores sales are now falling faster than any other UK retailers
In September 2016, sales in Britain’s specialist clothing stores, adjusted for inflation, fell faster year on year than in any other kind of retailer:
2. In Britain, unlike the US, department stores are doing rather well.
In the US, most industry observers are particularly aware of two big shifts: the shift to the internet and the decline in department stores. They all blamed Macy’s August decision to close 100 of its 850 stores on the internet’s growing share of clothing sales.
In Britain the past few years have been a lot kinder to department stores – though there are far fewer of them. It’s clothing specialists that have been seeing sales collapse.
This September’s clothing store collapse of 6.4% compares with a 7.4% increase in department store sales. There was nothing unusual about September: department store sales were 40% higher than in January 2010, while clothing store sales were just 5.6% up.
Britain’s full-line department stores, like John Lewis, have seen an extraordinary sales revival over the past few years. That revival is closely linked to the rarely observed revival in Britain’s major city centres, where most full-line department stores are located.
Retail has struggled in much of suburban Britain, and in many smaller towns. But central London’s not the only city that’s crowded with shoppers. The centres of old industrial cities like Liverpool and Leeds, as well as heritage cities like Oxford and York, are heaving – and development money’s been pouring in.
In the UK, Macy’s US problems are similar to the problems facing clothing specialists and Marks & Spencer: too much space thrown up in the past 20 years while sales have stayed sluggish.
3. And department stores aren’t alone
The kind of retailers that are really growing in Britain, of course, is what ONS calls “non-store retailers”, whose September sales were up 18% on the previous year.
They’re a mixed group: they include mammoth players like Amazon, and fashion websites like Asos and Zalando. But a fifth of this group’s sales aren’t bought online: they may involve phone orders or sales through physical stores many direct retailers now run for showrooming or click & collect. Though the e-commerce share of these retailers is growing, the segment is growing so fast that its conventional sales are just about holding up.
4. So apparel specialists’ internet offerings are being hit on all sides.
Over the past decade most conventional British specialist clothing stores have been hit by Primark: cheaper, more fun to shop and brilliant at managing shoppers’ attitudes through its use of social media.
Now their websites are being hit by all sorts of competition. Asos and Zalando are sharper on fashion, but there’s tough competition elsewhere on the fashion spectrum. Missguided and Boohoo offer affordable fun, while people like House of Bruar or Charles Tyrwhitt aim at the older end of the market – where both population and disposable income are growing faster. Not a day passes without at least half a dozen pieces of literature from these people pouring into Clothesource Towers.
Meanwhile, Amazon keeps on keeping on.
5. Is this a truly smart business strategy?
Of course there’s no hard evidence any big retailer’s making real returns from e-commerce yet. So maybe conventional clothing retailers are losing share in internet sales deliberately? Right now, for most retailers, the less they actually sell online the better their profit.
That strikes me as improbable – but only because I’m wedded to the philosophy that most things happen by mistake rather than by cunning plans.
Perhaps Britain’s clothing retailers have stumbled their way into the first successful new business concept we’ve seen for decades. The real solution to the unprofitability of internet apparel retailing may be to blunder your way out of the whole sorry business.