Everyone's life has already been greatly changed by the Coronavirus. Especially brick-and-mortar retailers suffer from the closure of stores. In March alone, the fashion retail sector in Germany lost more than 40% of its turnover due to the shutdown. This was the result announced by the largest panel in the German textile retail trade, the TW-Testclub, on Tuesday. The situation in the USA does not look any better either. In a recent report by CNBC, Deborah Weinswig, CEO and founder of the retail consulting and research company Coresight Research, estimates that the number of store closures by retailers in the US in 2020 will be more than 15,000, much of which would be due to the coronavirus. This would be a severe blow to the stationary retail landscape in the US, which has already been severely battered for several years.
A similar picture is emerging in Italy. Francesco Tombolini, president Italian buyer chamber, says: "Italian retail is destined to lose between 15% and 25% of its sales, registering probably a 65% loss in brick-and-mortar stores–maybe moderated by discounts–for s/s 2020 only in part balanced by the possibility that online grows about +20%, profiting from the fact that physical stores are closed. This impasse will slow down only from f/w 2020-21, a season they forecast about 40% less sell out. In this scenario, unsold merchandise in top stores could be about 16% and 21% but suffering most would be medium stores (-40%), while independent ones away from city centers might suffer a 55% loss.”
Due to the shutdown in the retail sector, many had speculated that e-commerce would benefit from this and that online sales would experience a real boom. As of today, this is especially true for basic products such as food delivery services, drugstores and pharmacies. Streaming services, remote meeting providers and social networks also benefit from the shutdown.
But these assumptions have not yet been confirmed for online fashion retail. Quite the contrary: The preliminary March trend of the SEO platform Searchmetric shows that at the end of the first lockdown week, Google search queries for fashion online shops have fallen by about a third. At Bonprix, search queries fell by 37%, at S.Oliver by 33% and at Zalando by 29%. About You recorded a decline of 27%, Limango minus 26%, Esprit minus 10% and H&M minus 5%.
CEO of the Brandon Group, Ilaria Tiezzi, says e-commerce in Italy is growing at double-digit rates in all markets except fashion. According to Tiezzi, after a boom period, online fashion purchases have begun to take a different direction and are already showing a loss of around 30% following the outbreak of the coronavirus. This opinion is also shared by Roberto Liscia, president, Netcomm: “E-commerce is generally growing triple digit, especially in food and home products in these days, while other sectors like fashion and tourism are especially losing.”
According to the German Fashion Institute (DMI), the declines can be explained by the fact that "people's priorities shift dramatically when they're stuck in their homes" and that "fashion is primarily about how you look when you're out and not how you look when you're home alone."
Whether in brick-and-mortar retail or online, it is understandable that customers currently do not rush to buy products from the fashion sector, let alone fashion luxury products, but especially for many smaller stationary retailers this avoidance means, in the worst case, the destruction of their business. Kerstin Görling, owner of Hayashi in Frankfurt, says: “My existence is threatened. My store is closed. My costs continue to run: rent, employees, high inventory levels, which are now actually in peak season. Even online sales are frozen at the moment, of course, because luxury fashion is the last thing people think about. With the closure of the stores, the basis for my business is no longer there.”
It remains to be seen how consumer behavior will develop in the coming weeks. This depends on many aspects that are, at least at the moment, still completely unclear. But one thing is already certain. The brick-and-mortar retailers have already experienced the greatest damage.