The COVID-19 pandemic has brought about a major shift in consumer behavior, particularly in the fashion industry. Online fashion retailers Zalando and Asos are reaping the benefits of this change, with their stock prices soaring. Europe’s largest online-only fashion retailer, Zalando, recently announced that it expects a significant increase in second-quarter sales and operating profit, surpassing market expectations. Similarly, British fashion retailer Asos saw a rise in its shares after rival company Boohoo reported better-than-expected revenue growth for the first quarter of the year.
Analysts are predicting a remarkable growth rate for online fashion this year, with estimates suggesting that it could account for 23% of European sales in 2020. Prior to the pandemic, these levels were not anticipated until 2024. Furthermore, experts forecast that the market share of online fashion could climb to 37% by 2030. The closure of brick-and-mortar stores during the global lockdown has had an unprecedented impact on the retail industry, resulting in a surge in online sales.
Zalando’s success can be attributed to its strategy of transforming into a platform that offers a diverse range of brands. By providing marketing and logistics services to these brands, Zalando has cemented itself as a preferred platform for online fashion sales. This approach has proven beneficial not only for Zalando but also for the brands themselves, as they can tap into Zalando’s large customer base and established infrastructure.
Major fashion retailers are also recognizing the significance of online sales. Inditex, the parent company of Zara, has stated its expectation for online sales to constitute a quarter of its overall sales by 2022, up from the current 14%. Similarly, H&M witnessed a 36% surge in online sales during the period March to May, despite a significant decline in overall group sales.
However, it is important to note that despite the growth of online fashion, there are still consumers who prefer shopping in physical stores. The ability to physically see and feel products before purchasing, as well as the thrill of finding bargains, continue to attract shoppers to brick-and-mortar retail. Discount retailer Primark, for example, experienced long queues of eager customers when its stores reopened in England.
In conclusion, the COVID-19 pandemic has accelerated the growth of online fashion as more consumers turn to ecommerce. Companies like Zalando and Asos are enjoying substantial sales increases and market share growth. While online sales continue to flourish, physical stores still have an important role in the retail industry, as they provide a unique shopping experience and offer bargains that are not readily available online. The future of fashion retail is likely to be a combination of digital and physical platforms, catering to the diverse preferences of consumers.