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Fashion, luxury and lifestyle news aggregator – February 2021

Posted: 15/02/2021

What can we expect from 2021?

The retail industry entered the new year carrying the (hugely) disruptive burdens of 2020: Covid-19, the start of a recession, various business restructures and administrations and, if that wasn’t enough, Brexit.

With the UK in its third national lockdown in less than ten months, it is difficult to see how the retail industry will bounce back this year, even given the enormity and pace of the vaccine rollout programme.

Taking that sceptical stance, The Centre for Retail Research has estimated that by the end of 2021, retail sales will be lower than they were in 2019. However, it does predict that sales should recover to their usual level by 2022.

Elsewhere, other experts predict welcome improvements: KPMG/Ipsos Retail Think Tank forecasts the potential for recovery of UK retail towards the second half of the year, banking on increased consumer savings, heightened consumer demand, increased consumer confidence and a successful vaccine rollout.

Unsurprisingly, the rising online sales trend from last year is expected to continue. Notably, John Lewis reported that online sales last year accounted for between 60% and 70% of its sales, compared to 40% before the pandemic.

Moving away from the health crisis, entry into 2021 saw the end of the Brexit transition period, forcing many retailers to reconsider their supply chains - this could have repercussions on business costs and, in turn, product prices. London Designer Outlet general manager Sue Shepherd has noted that “this will put strains on supply chains and consumer choice, however the retailers that perform the strongest will be those that take action to future proof themselves”.

The Centre for Retail Research notes that local and independent retailers may struggle to compete with e-commerce giants that can easily adapt to these changes. That said, the presence of the pandemic has and will continue to encourage the ‘shop local’ movement. Roger Wade, chief executive of Boxpark, praises independent retailers as being crucial to the survival of British high streets during the pandemic as “independent retailers fill in the gaps by offering unique, artisan products and a more personalised experience for consumers”. However, there are still some concerns as to whether smaller retailers will be able to meet the current business rates that encumber them.

The performance of retailers is, for a consecutive year, largely out of their hands. The sector will no doubt suffer further this year but, hopefully, there is some light at the end of the tunnel.

Administrations and knock-on effects

The collapse of Arcadia brought a dramatic end to Sir Philip Green’s rule as ‘king of the high street’ at the end of last year, casting doubts over the existence of its brands and some 13,000 jobs.

Ian Grabiner, chief executive of Arcadia, said it marked an "incredibly sad" day for the group. "The impact of the Covid-19 pandemic, including the forced closure of our stores for prolonged periods, has severely impacted on trading across all of our brands," he said.

Even before Covid-19, Arcadia's best-known names were struggling against their newer, online-only competitors such as Asos, Boohoo and PrettyLittleThing. The pandemic only served to exacerbate this disparity, since the shift to online sales over the last few months has been significant.

At the beginning of the month, Asos struck a £330 million deal to acquire the Topshop, Topman, Miss Selfridge and HIIT brands, as well as remaining stock. Thousands of jobs remain at risk as Asos will take the brands exclusively online and about 70 high street stores are expected to close. Around 2,500 employees risk facing redundancy as a result.    

Nick Beighton, CEO of Asos, claims the acquisition will expedite Asos's ambition to become "the number one destination for fashion-loving 20-somethings throughout the world".

Last Monday, Boohoo swept up the Dorothy Perkins, Wallis and Burton brands for £25.2 million. It has been reported by the administrators, Deloitte, that 2,450 staff will lose their jobs as a result of the sale and the stores will permanently close. Last month, Boohoo paid £55 million for the Debenhams brand and website.

These latest casualties add to the growing pressures on councils to rethink the way they attract footfall to British high streets. Adding to this, a recent poll by e-commerce provider Brightpearl indicates that retailers are increasingly looking to abandon the traditional bricks-and-mortar model altogether; of 1000 brands and 2000 consumers surveyed across the UK, 24% of the retailers said they would be closing their physical stores in 2021.

This article has been co-written with Hannah Fricker, a trainee solicitor in the commercial, IP and IT team.

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