May 30, 2012
-- A study commissioned by Webloyalty has found that despite a predicted growth in the fashion retail sector of £7.9bn by 2015, the UK is set to lose almost 4,000 physical stores from our high streets. The study by retail research specialist Conlumino indicates that the erosion of growth by online will create a situation where the costs of running a physical fashion store outstrips the available increase in physical sales.
Once inflation is stripped out, spend at physical fashion stores will increase by just under 5% by 2015. In contrast, the cost of running physical stores is forecast to rise by 10.2% over the same period. It is inevitable that such a differential between costs and sales increases will make some space uneconomic. As a consequence, it is likely that the UK will continue to see a reduction in fashion store numbers and fashion retail space over the next few years.
The research forecasts that in order to maintain profitability, around 3,900 individual fashion shops will close by 2015 with a loss of 6.6 million square feet of selling space. This is a decrease from 111,654,000 square feet in 2011 to 105,009,000 by 2015 as retailers reassess how much space they need to drive sales going forward.
Neil Saunders of Conlumino is keen to point out that this is not necessarily bad news for the fashion industry but that physical stores need to find their place in the multichannel environment:
“Buying fashion today is a much more complex process than it was in the recent past. Fashion stores are becoming polarised into those that act as points of contact or for functional purposes; and those that add significant value, are more experiential and act as brand enhancers”.
Guy Chiswick, Managing Director of Webloyalty “We must not allow the loss of physical retail space to overshadow the strong predicted growth of the fashion sector. For the first time ever online will take the lion’s share of overall growth. This means that retailers must readdress their business models to ensure that online, mobile and social media channels all play a role in driving revenue”
About the research
Thriving in a Multichannel World, Part 1: Fashion was produced by retail research specialists Conlumino. The report analyses the complex world of multichannel fashion retail, considers future trends and provides recommendations to retailers.
The full report is available on request.