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The government-ordered closure of stores in shopping malls punched a big hole in the revenues of the largest clothing and footwear retailers in Poland. The surge in e-commerce could not compensate for that. And sales will not recover to their pre-epidemic levels before the end of 2020, as the economic crisis begins to bite.
Clothing and footwear market will be hit harder by COVID-19
The clothing and footwear market will be hit harder by the crisis triggered by the COVID-19 epidemic than any other segment of Polish retail. According to our forecasts, it will shrink in value by at least 7.1% in 2020, making this one of the worst years ever for the sector. By way of comparison, in 2015-2019 the market grew by an average of 4.7% a year.
Predictably, the COVID-19 lockdown imposed in mid-March had a huge negative impact on the revenues of leading clothing chains, depressing their first quarter performance and reducing their April sales to a fraction of year-ago levels, as e-commerce became their main sales channel.
Thus, for example, first-quarter Polish sales at CCC, the leader of the footwear market in Poland, slumped by 33% year-on-year, to PLN 274.5m (€60m). At the same time, its e-commerce revenues increased by 39% in March, and the share of online in total revenue shot up from 28% to 43%.
LPP, the largest Polish clothing retailer, saw a 35% year-on-year slump in total sales in the first quarter of its fiscal year (February-April 2020), to PLN 1.19bn (€260m), according to preliminary estimates. At the same time, its e-commerce sales increased by 129%, to PLN 398m (€87m). LPP also said that in April – when almost all of its brick-and-mortal stores were closed – e-commerce sales surged by 270% y-o-y.
Wojas, a major domestic footwear retailer, said that consolidated sales revenues in April were just PLN 8.78m (€1.92m), down by 64% y-o-y. For January-April 2020, consolidated sales revenues were down 18%.
And VRG, the fashion and jewellery group that owns Vistula, Wolczanka, Deni Cler and Bytom, said that due to the lockdown, and despite a good start to the year, first-quarter sales revenues at its clothing business declined by 11% y-o-y, to just under PLN 117.3 m (€25.6m).
Consumers did not rush back into stores after lockdown’s end
Stores in shopping malls were allowed to reopen on 4 May. But retailers are reporting that customer traffic and sales are significantly lower compared to before the coronavirus outbreak, or to last year .
Thus, for example, Intersport Polska said that in the first week after reopening, i.e. 4-9 May, traffic at comparable stores was down 45% year-on-year and sales were down 46%. On the other hand, the strong growth in e-commerce continued, with sales up 107%.