News of high street closures hit the headlines once more this week as online fashion retailer Boohoo Group announced their takeover of Coast and Karen Millen, bring both out of administration.
In what has been described as an “unlikely” takeover due to Boohoo’s existing brands – which comprise mainly youthful “fast fashion” websites – this is likely to be another example of a successful online retailer diversifying their offering to expand their consumer base and future-proof their profits. Whether they can apply the same marketing model they have used successfully with other, more youth-focussed brands remains to be seen.
Meanwhile, the British Retail Consortium and KPMG released new data this week, highlighting that retailers experienced the worst July since records began.
Possible explanations for poor sales include lack of confidence in the economy due to uncertainty about Brexit and unemployment.
Analysis by Plimsoll has rated 340 companies in the clothing retail sector as “danger” and a further 154 as “caution”. With nine out of ten failed companies having been rated “danger” up to two years prior to their demise, this suggests the industry has more deep-rooted problems from which it could struggle to fully recover.
While growth in online retail sales also slowed in recent months, the BRC’s report also found that certain areas did better than anticipated.
Health and beauty sales were particularly strong; while this could be attributed to preparations for the holiday season, this does mirror wider trends in this sector. Plimsoll’s research has listed online skincare retailers as among the UK industries with strongest sales growth; this will certainly be an area to watch in months to come.
With sales season approaching, the pressure will be on for both high street and online retailers to take full advantage. Like Boohoo, this may mean finding unexpected ways to reverse the negative trends and win as much of the market as possible.