More than a thousand stores of such famous brands as Zara, Bershka, Massimo Dutti will be closed all over the world. Inditex, which owns these brands, has announced a restructuring. The reason is the drop in sales and losses during the pandemic. The Russian fashion industry and retail also complains about the difficult situation.
Fashionable business will fail this year, experts say. Problems in the industry have been around for a long time, but the pandemic and related restrictions will be the last straw for many. The first victim in Russia has already appeared. In late April, the media reported on the closure of Fashion House chain of men’s and women’s clothing stores. The company managed 25 stores, mainly in the capital.
“Of course, there has never been such a crisis. Even in the most difficult times, consumption was stable anyway, procurement budgets were made,” said Georgy Rostovshchikov, CEO of Fashion Hab Russia, president of the International Buyers Association.
Now, clothing sales have collapsed almost completely. In April, according to the Federal State Statistics Service, 82 percent compared with March. Shoes at 70 percent.
And one more anti-record: high stocking of goods. There were no buyers – the products remained in stock. Stocks of clothing, according to the Federal State Statistics Service, will last for a year and a half of trade – for 574 days. By the way, for buyers in the short term, this can even be beneficial.
“Many mass-market brands, just network ones, will demonstrate a profitable offer. These will not be huge discounts of 70-90 percent, but a profitable offer will be: 30-60 percent,” said Anush Gasparyan, financial director of Fashin Consulting Group.
After the closure of shopping centers, retailers in Russia lost their main sales channel. Despite the rapid growth of online trading, in the whole country on the Internet accounted for only 12 percent of total sales. In addition, small regional companies could not quickly adapt to the new trading model.
Even such an international fast-fashion giant as H&M has announced a 57 percent drop in sales, and this is considering having its own online store. There, the turnover, of course, grew by a third. But this growth could not cover the losses from closing offline points. Another large network, which is widely represented in Russia, was told and presented about the same picture.
“Our losses for 2 months amounted to 2 million rubles,” said Ksenia Ryasova, president of Finn Flare.
Fashion retailers are facing a general drop in demand. Moreover, this trend in Russia was outlined in 2019 – then sales of clothes and shoes for the first time in several years fell by 3-4 percent. Under the influence of the pandemic, this trend has only strengthened.
“The market was very oversaturated with products, volumes, and this led to the fact that now the volume of products that are on the market is not digested. Consumer activity has fallen significantly,” explained George Rostovschikov.
Many expected that after the opening of shopping centers and shops, people rush to shop. But the data for the first week of June suggests otherwise. Russians spending on clothes and shoes is still in the red. Buyers are not eager for shopping centers.
So far, experts are talking in general about strengthening new trends – for conscious consumption, reduced purchases. And increasingly, they began to talk in the industry about the imminent decline of the era of fast fashion.
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