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Online proposition to play big part in recovery for fashion retailers, analysts say

The already increasing trend of online shopping has only grown further as consumers face lockdowns, becoming a need for the most vulnerable in some cases.

While the market seems to agree that food shopping platforms such as Ocado Group PLC (LON:OCDO) are the future, analysts point out that online will drive recovery for fashion retailers too.

The current disruption is wreaking havoc in the high street, with several companies launching emergency fundraises or entering administration in a matter of weeks – the latest being TM Lewin and Oasis Warehouse.

READ: ASOS upped to overweight as JP Morgan says firm is stronger following recent challenges[hhmc]

For pure-play online retailers such as ASOS PLC (LON:ASC) and Boohoo Group PLC (LON:BOO), shop closures could be a chance to snap up market share.

Although no one knows how the pandemic will pan out, they are both expected to capitalise in this time of market reshuffle.

“As online penetration increases ASOS has secured financing to secure its long term growth with reassurance for suppliers and consumers,” analysts at Citigroup said.

The trend will not favour Primark owner Associated British Foods PLC (LON:ABF), as it does not have an online offering.

Despite its widespread presence on the high street, Next PLC (LON:NXT) is also expected to emerge from the pandemic with fewer bruises than others.

READ: Next restarts online sales in a very limited way due to coronavirus safety measures[hhmc]

Its online platform last year generated annual revenues of more than £2bn, of which around 25% comes from Label, the groups third-party platform for brands such as Barbour, Hugo Boss, Superdry and Mint Velvet.

“With the industry likely to be swamped by unsold seasonal product, we believe Next will benefit as a useful clearance channel, especially given the groups commission model, which will give the brands a level of control over pricing and ranging,” say analysts at Peel Hunt.

A strong online presence will benefit the luxury sector as well, although Deutsche Bank number crunchers say Burberry PLC (LON:BRBY) will face steep declines due Read More – Source
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