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What was the status of the retail market development in March 2022? Initially, there were a lot of good things to report. Just when everything seemed to go back to 'the old normal' and the fashion retailer was certainly reaping the benefits - the sales at the beginning of this year were again comparable to the covid-free year 2019! - the next challenge came knocking at the door. Nobody is unaware of the humanitarian crisis in Ukraine and its war with Russia: it also effects the Dutch economy – and the fashion retailer.
According to CBS (Statistics Netherlands), the Dutch economy increased by almost 5 percent last year – which is above the level of the covid-free year 2019. This was partly due to increasing exports and higher consumption. It is expected that consumption will continue to increase as society is slowly clambering up. People feel the need to go out again and because they have been able to save a lot of money in the lockdown, have money to spend. On the other hand, high inflation is caused by rising energy prices.
The higher energy costs, raw material prices and transport costs also ensure that the average selling prices will rise. Everything will be more expensive. In January, inflation rose to 6.4 percent. To indicate how fast this is going: in December this was 5.7 percent. According to the European calculation, inflation in the Netherlands is currently well above 8 percent.
Fashion retail; the turnover in March and the forecast of the spring season
This has an impact on the fashion retailer, who is also struggling with high energy prices, rising transport costs and raw material prices. This is reflected in, among other things, the clothing prices. Consumers now pay an average of 6 to 7 percent more for their clothing. Inflation and ever-rising prices create uncertainty among consumers, and this will play a role in purchasing power in the coming months. To what extent exactly, of course, depends entirely on the developments.
Let's focus on what's going well. In the first two months of 2022, the total turnover of the fashion retail was back at the level of the covid-free year 2019. If we keep 2019 as the reference year, we see that women's fashion is 4 percent ahead in total sales and men's fashion 3 percent. Only the children's fashion category, with 15 percent less turnover than in 2019, still has some catching up to do.
That possibility exists, if inflation does not rise faster and purchasing power does not fall. The springtime sun makes for happier people in the shopping streets, who eagerly look for new seasonal items. And it just so happens that the fashion stores are ready for this now, packed with ideas, inspiration, new colours and enthusiastic search and style assistance. Because the latter tactic usually pays off.
Written by Marjolein Stormezand in collaboration with Euretco.