UK Clothing & Footwear Sector Report summary
January 2024
Period covered: Period covered: 26 November - 30 December 2023
3 minute read
Note: This report summary is one or two months behind the current month as standard reporting practice. The content is indicative only and incomplete with certain data undisclosed. Become a member to access this data or take out a free 30 day membership trial now.
Clothing & Footwear Sales
Clothing sales fell xx% YoY, while Footwear sales fell by xx% YoY in December, according to the Retail Economics Retail Sales Index (value, non-seasonally adjusted). Apparel inflation is running at xx%, suggesting continued volume declines.
Clothing & Footwear sales’ performance in December reflects several downside (-) factors, including:
Spreading cost (-): Consumers were intentional with their spending this Christmas, cutting spend where possible and spreading their shopping across Q4 as they sought to reduce costs. When they did spend in December, it was on health and beauty (xx%) and groceries (xx%) at the expense of apparel.
Mild and wet weather (-): The joint-fifth warmest December on record for England and Wales curtailed demand for seasonal winter lines, while wet weather at the end of the month also impacted footfall.
Cost of living squeeze (-): The festive period was particularly volatile for luxury retail this year, as aspiring classes face the onslaught of higher mortgage costs while feeling financially insecure. Retailers also blamed the lack of VAT-free shopping for weak UK results. This was reflected in the trading updates from players such as Burberry and Mulberry.
Difficult comparatives (-): Apparel retailers enjoyed a strong performance in Christmas 2022 as Covid restrictions lifted and the sector bounced back to life.
Economic rallying
Early discounting in November meant shoppers rushed to take advantage of deals, impacting December spending.
The apparel sector was further dampened by high spend on other non-essential areas such as hospitality, leisure, and travel. Barclaycard reported airline spend was up 20% in December and said 15% of British consumers plan to take more holidays in 2024.
Against a fragile economy and elevated borrowing costs, savvy shoppers either concentrated their spending around promotional events (e.g. Black Friday) or held out for last-minute deals in the final days before Christmas.
The volatile backdrop gave a clear edge to omnichannel retailers able to quickly adjust to market demand through product selection, pricing and stock levels, meeting dynamic customer needs across different channels.
Christmas updates
Christmas trading results revealed several winners amongst the difficult conditions, with Next and Marks & Spencer among those reporting strong Q4 sales.
Next reported sales “ahead of expectations” (like-for-likes up 5.7%, 9 weeks to 20 December) and upped its full-year pre-tax profit guidance by £20m to £905m.
However, two of the industry’s biggest online players were notable in their absence. Asos and Boohoo chose not to update shareholders on their Christmas trading performance.
The lack of an update from two struggling online behemoths has caused concern amongst investors, with both companies now among London’s most shorted stocks.
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Inflation unexpectedly ticked up in December, with Clothing prices rising for the first time since August
Source: OBR, Retail Economics
