Fashion Consulting Group forecasts online sale to grow 2-3-fold this year. But offline outlets will find it hard, every third or even every second of them may close down.
During the pandemic, some fashion brands had to cut production, and some had to start making pajamas instead of office shirts. Saint-Petersburg TV Channel reporter Milena Ikonnikova found out how the quarantine affected the Russian fashion business.
Alina Martinez Navas, brand manager of Ola Ola, a clothes and accessories manufacturer, tells: ‘Before the pandemic, we planned to make 12 such dresses in all standard sizes from XS to L. But the pandemic changed our plans, and we made only four dresses. One is still here. That’s it.’
This designer brand cut production at the very start of the pandemic. Later, they made the missing sizes on customer demand in a distant mode. The strategy proved a success, at least, the company has been able to avoid losses. Online orders meanwhile grew manifold, due to increasing investment into advertising.
Alina Martinez Navas continues: ‘The budget must have grown 2.5-fold. We spent about the same money on Instagram and added other network activities on Yandex and Google. The sales, maybe, tripled.’
Mass market has been hit harder due to the large scale of business. This network brand developed this summer collection last year in autumn. By the time when offline outlets were closed most of the items were already being made. They had to revert to online sales. In June, some retail outlets were opened, which helped slightly increase the sales. However, only 8 of the company’s 80 outlets in the city are currently open.
Igor Maltinsky, director of the development department of Melon Fashion Group, a clothes manufacturer, tells: ‘It was 10% of the entire sales in St. Petersburg in terms of items, and 3-5% in terms of sales, as most of the sales came from large shopping malls. This 3-4% is now equivalent to 6-7% in terms of the year 2019 level.’
Milena Ikonnikova, reporter: ‘The answer to the question whether to go shopping or not depends on the length of the queue. If it is not too long, I can wait. But, you will need to put on a mask and gloves. And you cannot try things on anyway. No, next time, maybe. I’d rather shop online.’
According to Fashion Consulting Group, online sales can grow 2-3-fold this year. And offline clothes and footwear retailers are going to have hard times. Every third to every second outlet could close down Russia-wide. But experts believe there is no reason to panic.
Denis Ryzhenko, Managing Director of a Russian branch of a fashion holding, fashion consulter, says: ‘If we compare 2019 and 2018, the same network brands closed a large number of outlets. Adidas closed a large number of outlets in Russia, H&M closed a large number of outlets. And there was no pandemic then. The share of outlets to be closed will not make more than 12-15% in the large-scale segment, I believe.’
As for end-of-the-season sales, brands have chosen opposite strategies. Some intend to offer larger discounts to sell the collections they failed to sell during the quarantine. Others are not prepared to cut prices as they have incurred losses as it is. Luxury brands will be the last to reduce prices, according to experts.