Fast-fashion companies — especially those with physical retail, like H&M, Zara and Mango — are finding themselves in a tough spot as coronavirus spreads across Europe and the U.S.
Despite more people being at home and shopping online — data from Quantum Metric shows online apparel revenue growth is up 43% from this time last year — fast-fashion companies are in a difficult position, both those with retail stores and e-commerce-only businesses. Online-only players include Nasty Gal, Princess Polly and Fashion Nova. Fast-fashion brands are inherently built on the latest trends, as dictated by major fashion houses, celebrities and influencers. Now with much of world spending more time indoors decked out in loungewear, customers don’t have as much need for those trend-driven pieces. While companies like Princess Polly, Forever 21 and H&M are trying to pivot, using their websites to promote comfortable apparel for those staying at home, the trend-driven nature of the business puts these brands at risk.
“Fast fashion is more disposable. People buy it to look good in the office or for some event, but now behavior is changing and fast fashion is taking a huge hit. The supply is there, but the demand is not. Brands need to implement tactics like personalized promotions and personalized banners, so that when customers are browsing, they draw attention to products customers have expressed interest in and offer discounts,” said Graham Cooke, co-founder and CEO of personalization technology company Qubit.
Similar to other fashion businesses forced to close physical retail, most fast-fashion companies are offering steep discounts during this time in an effort to sell some of that inventory. Forever 21 is offering 25% off a purchase of $75 or more, encouraging customers to stay in and save, and Princess Polly is pushing 15%-25% off, depending on how much customers spend. Forever 21 and Princess Polly did not respond to a request for comment.
Most brands are promoting lounge and activewear products to customers through their websites, social media and customer emails, as more people stay at home.
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According to Quibit’s data, fast-fashion companies across the U.S., United Kingdom, Italy, France and Spain are set to see sales slip 20% in the month of March. Cooke attributed that to more retailers across those countries closing their doors and supply chains being impacted globally.
“Fast fashion will continue feeling the effects of [coronavirus] for quite a long time. Their success has always been in offering customers a wide variety of styles, fast. Retailers overall are also narrowing their collections to more basic items and colors that have a longer shelf life and broader appeal,” said Mark Burstein, president of software company NGC Software.
While both fast-fashion brands with physical stores and online-only brands are struggling right now, Maria Haggerty, CEO of fulfillment and logistics company Dotcom Distribution, said e-commerce-only brands will likely see the most benefit in the coming weeks compared to those like H&M and Zara.
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“The fast-fashion clients that have retail operations are clearly suffering and trying to move all of their business to e-commerce. Those that are e-commerce-only are going to do well in terms of selling now, but I think we will see a slow down in six to eight weeks when they are waiting for those new shipments to come in, with Europe pretty much offline and China is just coming back online,” said Haggerty.
