Retailers are being urged to focus on product, innovation and full-price sales to combat the current “crisis” facing the fashion industry.
The rising costs of doing business, such as the new living wage, teamed with a slowing economy, unseasonable weather, concerns over a possible Brexit, increasing levels of discounting and changing consumer behaviour have led to an unprecedented squeeze on fashion, say retailers and suppliers.
Fat Face chief executive Anthony Thompson told Drapers the market is the “toughest it has ever been”. His comments echoed those of Next chief executive Lord Wolfson, who last month said this year “may well be the toughest we have faced since 2008”.
Others have spoken this week of eroded margins, and told Drapers it was becoming increasingly difficult to stay upbeat.
Thompson said retailers need to “take responsibility” for the role they play: “Some factors are out of our control – like the economy or the weather – but our response as retailers has not been the right one. We are responsible for the level of discounting, and the lack of innovation and newness in the market, not the customer.”
Wolfson warned clothing retailers will be hit hard as shoppers spend their cash on entertainment and eating out rather than fashion. In March UK shoppers spent 7.1% more year on year on leisure activities such as going to restaurants and bars, while spend on clothing and footwear dropped 4.8%, Visa Europe’s UK Expenditure Index shows.
“We have to ask why they aren’t buying clothes,” said Thompson. “The quality isn’t consistent and there is too much ‘me too’ out there – we are accountable for that.”
He added: “Retailers need to wake up to the need for newness, better-quality product and the corrosive impact of discounting. It’s getting very serious and there will be a lot more casualties on the high street. We need to be brave and sort it out.”
The chief executive of one menswear business agreed: “In my entire working life I’ve never known people to say it’s a great time to be a retailer, although obviously there are tougher years than others. Brexit could be unsettling, but it’s out of our hands and we have to manage these things – that’s what we’re paid to do.”
Derrick Hoyle, buying controller at footwear multiple Sole Trader, bemoaned the “constant erosion of margin”.
”If retailers are to be successful through 2016 they need to have a solid strategy that allows them to wean themselves off the discounting drug,” he argued.
One supplier to high street multiples said quality product was key to mitigating the current “nightmare” market: “In my 35 years in the business I have never seen the market so concerned about margin and price, and product is struggling as a result. Buyers used to buy from the heart and worry about margin later to make sure the product wasn’t watered down – now it’s all about price.
”The high street is suffering and the industry is in crisis. We have to get back to the product so customers go shopping.”
“Retailers need to bring some newness into the market and they will do that through a balance of direct and indirect sourcing – going direct to factories for everything can give you a blinkered vision on design.”
“It’s not easy on the high street so the focus has to be on the product,” agreed the managing director of one footwear brand and private label supplier.
“Product and what your business stands for are paramount. If they aren’t in the right place you will get swallowed up. The future of growth in the UK is looking uncertain so we are looking abroad for expansion.”
Next has revised down its expected growth for 2016 to between -1% and 4%. It had previously expected growth of between 1% and 6%.