Europe Nonfood Retail: Quantifying the Lockdown-Driven Declines

• In apparel, the UK’s Next Plc reported full-price product sales down 41% in the period January 26 to April 25. In-store sales were down 52% while online was down 32%. As shown below, this average conceals much sharper declines after the UK lockdown began on March 23 and Next temporarily closed its UK warehouses serving online sales on March 26.

Figure 1. Next: Full-Price Sales per Week

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Source: Company reports

• Zalando, whose biggest market is Germany, pointed to a sharp decline in March followed by a recovery in April. Reporting 1Q20 results, management guided for 10–20% growth in both gross merchandise volume (GMV) and revenues for the full year.

Figure 2. Zalando: GMV Development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Source: Company reports

• H&M reported deep declines in major markets for the period March 1–May 6: UK sales were down 60%, Germany down 46% and France down 71%. At a group level, total sales were down 57%, within which online sales were up 32%.
• On May 13, the British Retail Consortium (BRC) reported total UK retail sales were down by 19.1% for April (formally April 5–May 2), the first full month of lockdown. Online nonfood sales increased by 57.9% in April, taking e-commerce to 69.9% of total nonfood sales, versus 29.9% in the same month one year earlier. For the three months ended April, in-store sales of nonfood items were down 36% (the BRC splits total food and nonfood performance on a rolling three-month basis).

Benchmarked to data from the Office for National Statistics (not the BRC), we expect total UK retail sales to have fallen by around one-quarter year over year in April. We estimate the UK store-based nonfood retail sector will report a total year-over-year sales decline of close to three-quarters in April, with e-commerce accounting for the lion’s share of remaining sales in this sector. The Office for National Statistics reports UK retail sales for April on May 22; find our report covering March data here.

• Readers may be interested in our recent deep dive on European apparel retail.