In the clothing sector the retail trade is in crisis.

In the clothing sector, the retail trade is in crisis due to the decline in the number of visitors to city centres and their pedestrian zones. Textile distribution is about to undergo a radical transformation that will revolutionize the entire sector. In many cities large clothing stores remain locomotives that attract the public in pedestrian areas. If the clothing sector suffers, all the activity of the city centres suffers. In Europe, clothing and clothing occupy 40% of sales areas in pedestrian areas. Until recently, 2015 studies estimated that the retail apparel business still had a chance to keep up with a multi-channel system that combines physical distribution with online distribution via the Internet. To date some scholars, believe that traditional distribution has lost all foundation and justification.  In all areas online merchants have taken advantage of the choice of products, assortment, stock or logistics. The traditional retailer’s advantage in consulting is melting like snow in the sun due to staff reductions caused by the need to save money. But the fall is more and more brutal. Since 2009 in Europe, a third of sales areas in clothing have gone out of business. It’s not just the small shops that have disappeared from the department stores and the chains are facing the same problems; brands such as C & A or Tom Taylor and brands like Gerry Weber are in the midst of restructuring in search of strategies that would allow them to regain their past splendour. A large survey of the German trade journal “TEXTILWIRTSCHAFT” found that one in eight retailers saw their turnover drop by more than 20% in 2019. The phenomenon is also true for shopping centres in which, among other things, restaurant signs replace clothing stores that are closing. Another indicator of the evolution of society is the establishment in the city centers of an adult playground of the “ESCAPE GAME” type. The consumption of clothing is becoming more and more online the free time being devoted to entertainment. In spite of all the Europeans still spend considerable sums for the clothing only in Germany it is 65 billion euros. But more and more it is the actors of the online distribution who profit from this manna. Sales have become less popular and consumers are turning to events such as Black Friday or Amazon Prime Day. The online fashion store “ZALANDO” has published enlightening figures – 15% increase in turnover – 3 Million new customers for a total of 27 million customers – A turnover of 5.4 billion euros in 2019. Specialists and analysts expect a new redistribution of cards in the next 10 years. The future would belong to the companies that will come to make cohabit the digital world and the purchase in store. The Smartphone will have a role to play replacing the sellers to guide and advise customers and cashiers. Many managers have realized that it is by multiplying experiences of all kinds that we will find a sustainable economic model.

The category that will suffer the most is small retailers. Those who are not able to invest considerable sums to adapt their businesses to the new demands of consumers. Many downtown managers put their heads in the sand which never solved a problem. Without visitors in pedestrian areas there will be no future for retail. In the retail sector, the clothing sector is in crisis and it suffices to compare the situation of two heavyweights in the Zalando and Hugo Boss sector. At the time of the publication of the 2018 results of the two companies which took place almost simultaneously a gap widened on the stock market. While the course of Boss immediately dropped a real buying madness has concerned the titles of Zalando.

Published figures have confirmed that E-Commerce is still growing, arguments such as the possibility of touching the fabric or trying the garment no longer carry thanks to the facilities for returns. Consultations on the Zalando website have increased by more than 30% to reach a staggering one billion connections per quarter! Zalando’s forecast profit (EBIT) for 2019 will be more than 175 million euros. At Hugo Boss the numbers are not catastrophic, but the indicators are down and only the online sale is up more than 16%. Cost pressure is driving more and more retailers out of business, and the strategy of companies like Boss is increasingly focused on “COST KILLING” to resist the onslaught of Internet portals. Boss has also developed partnerships with retailers on the basis of a concession contract. Interestingly in principle the dealership contract is cumbersome and complex to manage requiring iron discipline in management from the retailers. This rigor in management is not always one of the strengths of the independent retailer. The concession contract also has a negative influence on the cash flow of the companies that offer it.

It is not unrealistic to think that soon structures like Zalando will be the main distributors of Hugo Boss products. Zalando’s objective for 2023 is a turnover of 20 billion euros, this tripling of its activity will be at the expense of independent trade. When finally, we see that Nike is experimenting with the model of the subscription for its young customers the shoes being directly shipped by the manufacturer after return of the old pairs. If the clothing market is becoming more of E-commerce to subscription it is feared that the desertification of city centres will accelerate further. Urban planners, municipalities and property owners will have to consult each other and implement new ideas to stop the desertification of the pedestrian zones that is getting ready. Georges Vonfelt