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Weather overheated traffic
A warm September and difficulties with product renewal further reduced consumer interest in clothing and footwear stores. In September and early October, traffic fell by 12% compared to the same period last year, exceeding the average annual decline rate of 10%. The company was unable to sell the remainder of its summer collection in time. Despite the change in season, there are doubts in the market that the situation will change dramatically. Sales will slow in October due to expectations of discounts in November, and next year, demand is expected to fall by 5%.
According to Focus Technologies, the number of visitors to fashion stores fell by 12% from September 2 to October 6 compared to the same period last year. This is a more pronounced decline compared to the previous one. The attrition rate is estimated at 10% during the first 40 weeks of the year (from January 1 to October 6). Mikhail Vasiliev, head of research and consulting at Focus Technologies, said that traffic fell by 24% compared to August figures. According to him, the decline in visits in the fall can be especially associated with assortment problems.
Finn Flare's September traffic was down 20% year-on-year, while revenue was down 3%, said Ksenia Ryasova, CEO of the chain. According to Ilya Yaroshenko, CEO of Baon, traffic was down 25% year-on-year in August and September. The decline in revenue is not obvious. The loss of traffic was partially offset by higher conversion rates and average product prices.
Russians' interest in buying clothes and shoes has been declining throughout the year. By the end of summer, market participants attributed this primarily to the desire to rationalize consumption. In the context of the "smart savings" trend, people are starting to choose more practical and versatile clothing and make spontaneous purchases less often. Increased competition due to the expansion of foreign brands has also had a negative impact on the market (see Kommersant of September 10). Feeling the cold weather, Russian entrepreneurs have already slowed down the pace of launching new brands (see Kommersant of September 25).
Market participants attribute the new September decline to the prevailing warm weather. Earlier, Moscow State University reported that the average monthly temperature in September was 17.9 degrees, which is 5.7 degrees above the climatic norm. Ilya Yaroshenko says that the start of the fall season has changed significantly this year. According to him, outerwear was usually sold in August, and now demand appears only in October. Although the attendance is still lower than last year, experts note. Finn Flair presents a better picture. By mid-October, the flow of potential buyers was 13% higher than last year. Alexey Vanchugov, managing partner of Vanchugov and Partners, reported that the warm weather coincided with the end of the period of consumer purchasing activity at the end of August, on the eve of the start of the school year and business season.
Having failed to sense consumer interest in autumn collections, retailers delayed updating their product range and left summer goods on the shelves. According to Mr. Yaroshenko, the remaining products are still sold in offline stores, many with big discounts. He notes that increased competition in the market is exacerbating the problems. The sales themselves do not contribute to an increase in store traffic. Mikhail Burmistrov, CEO of Infoline-Analytics, explains that this shopping format has almost completely penetrated marketplaces. He said that it is not always profitable for retailers to sell collections on the platform due to price competition and commissions.
Mr. Vanchugov does not rule out that the factor limiting the activity of Russian consumers in the fashion market in October will be expectations of sales in November. Many people are postponing large purchases. According to One Story partner Olga Sumishevskaya, next year the retailer is already planning to reduce sales by about 5%. Despite these discounts, the number of purchases per person is not increasing, the expert noted. She explains that the chain is currently focused on finding various ways to increase these figures. “For example, we try to sell several products at once in one image,” says Sumishevskaya.