According to early financial indicators, the impact of COVID-19 on the apparel and footwear industry during Q1 and Q2 2020 has been extraordinary, with several markets posting double-digit revenue declines as a result of strict lockdown measures in place across a growing number of them. Apparel and footwear revenues in 2020 are expected to decline by 15-30% on average (as per Euromonitor International’s COVID-19 scenario forecasts), posting some of the sharpest declines among all industries, given the discretionary nature of apparel and footwear spending.
COVID-19 has had a strong impact across all categories, but high-end designer apparel and footwear is likely to be the worst hit, given its heavy reliance on foreign tourist spending. On the other hand, more essential categories such as loungewear are set to benefit, given consumers spending longer hours at home, and their wider availability online while lockdown measures are in place.
Australians’ expectations of convenience and price competitiveness are evolving, and this has resulted in a growing preference to shop online. Even after the pandemic is over, it is likely Australians’ purchasing patterns will evolve. As Australians continue to embrace social distancing to slow the spread of the pandemic, there has been a significant decline in store traffic and there will be an increase in online shopping as people turn to e-commerce to purchase apparel and footwear. Euromonitor International estimates in-store retailing to reduce by 19% although still constituting a major chunk of 76% of the total apparel and footwear sales in 2020. In Euromonitor’s Voice of the Industry: COVID-19 survey, more than 57% of key industry experts in Australia expect a permanent increase in online shopping and almost a third believe there will be a long-term reduction in shopping in-store.
Retailers are prioritising ways to mitigate the impact of store closures by using technology to replicate in-store experiences online. Camilla and Marc, for example, relaunched its e-commerce platform by launching a smart store that is being used to connect with its customers via livestreaming, video and chat. The website also has a new appointment feature which allows customers to book one-on-one personalised styling advice from a designated retail consultant.
Australians got a taste for shopping online during the lockdown and now they are much more comfortable buying online. The trend is expected to continue into the future as retailers and delivery companies improve and try to make the whole experience more fulfilling. Forever New is an example of a player that was able to adapt its business to address the new normal. The brand recreated the in-store experience at home by making returns easy through the Boomerang courier service, that offers courier pickups from customers, which would then be delivered to the brand’s warehouse for a refund.
According to Euromonitor’s Digital Consumer Survey, in 2020, 71% of the Australian respondents said free delivery is a preferred feature for online shopping, which was followed by free returns, the second preferred feature. Australians shy away from shopping online because of the slow delivery and the hassle of returning purchases. Developing and improving fulfilment and last-mile delivery capabilities is more important than ever before. As evident during the peak of the pandemic, the current infrastructure for home delivery methods is slow and cumbersome. Delivery companies are adapting to the exceptional increase in online shopping and Australia Post has been at the forefront in responding to the shift in consumer behaviour. For example, seven-day deliveries are expected to be implemented in the country by Australia Post. The company has been delivering packages on weekends since mid-April to keep up with the growth in volumes of the parcel business during the lockdown.
The definitions of shopping in-store and e-commerce are increasingly blurred, and it is vital for all parties in the supply chain to be dynamic enough to respond to the changing purchasing habits of Australians and develop a customer-centric strategy. COVID-19 has been and will continue to be the catalyst the fashion industry needs to accelerate ongoing, yet marginal, business efforts towards a more reasonable fashion calendar, a more digital-savvy competitive landscape.