The UK clothing and footwear market is expected to contract by 3.9% next year, with volumes down by more than 10.0%, according to new research. [Clothing and footwear market set to shrink in 2023 - Drapers]
The clothing and footwear market has grown 6.1% in 2022, largely driven by inflationary price increases, and a resurgence in demand in the first half of the year, according to accountancy firm BDO's Retail Forecast Report 2023.
It says that shoppers were forced to cut back on purchases in the second half of the year, which led to the total spend for the full year 7.4% behind pre-pandemic levels and volumes down 1.0% year-on-year.
The report suggests that 2023 will be even more challenging as "consumers experience a greater level of financial strain".
Earlier today, BDO's High Street Sales Tracker showed that heavy discounting in the run-up to and during Black Friday and Cyber Monday may have resulted in retailers "cannibalising" their December sales.
Total like-for-like sales for both in-store and online purchases in November were 4.1 percentage points higher than in November 2021.
Sophie Michael, head of retail and wholesale at BDO, said: "As we head into 2023, conditions are only expected to deteriorate even further, with falling consumer demand and increasing operating costs putting even more pressure on already squeezed profit margins. The weakening pound has made imports and raw materials more expensive, while staff shortages are forcing businesses to increase wages, leaving retailers with little wiggle room to reduce prices further to entice shoppers.
"In the coming months, retailers will be navigating their businesses through a period of continuing inflation; their focus will be on generating and protecting cash and working capital, while cutting costs wherever possible and streamlining their businesses to protect margins. These challenges will need to be balanced with a need to retain customers and aim to drive profitable growth."
