The UK fashion retail industry had a disappointing month in November, as the discounts and promotions offered during the month failed to entice consumers to spend. BDO’s High Street Sales Tracker reported a decline of 0.3% in total like-for-like (LFL) sales compared to the previous year. Although the month started off strong with a 4.7% increase in LFL sales in the first week, sales steadily declined in the following weeks. The fashion sector was hit the hardest, experiencing a sharp decline of 3.6% compared to the previous year’s impressive 8.5% rise.
Not only did physical stores face a decline in sales, but online sales also performed poorly, dropping by 0.2% compared to the previous year. The in-store LFL sales saw a slight increase, but it was not enough to compensate for the negative online performance. On a positive note, the homewares and lifestyle sectors showed growth, with sales increasing by 5.2% and 2% respectively.
Sophie Michael, the Head of Retail and Wholesale at BDO LLP, expressed her concern over the underwhelming performance of the fashion sector. She emphasized that relying solely on Black Friday promotions and discounts is not enough to stimulate consumer purchases and is actually hurting retailers’ profit margins. Michael believes that retailers need to find new ways to break this cycle in order to see positive changes in the industry. A possible explanation for the decline in fashion sales could be that consumers are prioritizing purchasing one slightly more expensive item rather than buying multiple cheaper items due to constrained discretionary spending.
Looking ahead, the fashion retail industry is expected to face additional challenges in 2024. Business rate rises and an increase in the National Living Wage will put more pressure on overhead costs. Even if there is a significant increase in consumer spending and retailers have a successful December, it is unlikely to fully recover the losses experienced during the Golden Quarter. The industry will continue to face difficulties in the coming months.
For more information on the challenges facing the UK fashion retail industry, visit here.
To learn about strategies for breaking the cycle of reliance on discounts and promotions, click here.
