Online Retail Profits Soar While High Street Suffers

The success of online retail over the past year of lockdowns is showcased by ASOS, the online fashion retailer, which has seen its active customer numbers rise from 1.5 million to 24.9 million in the six months to February. The impact of lockdowns on the high street has, on the other hand, been catastrophic. Eleven thousand shops in Britain closed last year alone and thousands more are expected to close in 2021. The Guardian has the story.

ASOS has more than tripled first-half profits to a record £106 million and raised full-year expectations as the online retailer continues to benefit from the pandemic.

Consumer trends accelerated by Covid had boosted trading, particularly in the UK and most of Europe, the company said, but it cautioned that the economic outlook was uncertain and shopping habits would change once clothing stores reopen next week.

While the reopening of “non-essential” shops next week will shift consumer attention from online to the high street, the continued imposition of rules on social distancing and mask-wearing will act as a brake on any recovery for the high street. ASOS said in a statement:

In the coming months we expect a portion of consumer demand will move back to stores as restrictions are eased throughout our markets, but we expect online penetration to remain structurally higher than pre-Covid levels.

The company’s recent performance is as follows:

Profits increased 253% year-on-year increase to £106.4 million in the six months to February 28th, as total group revenues climbed 24% to £1.97 billion.

Asos put a number on the amount of profit generated by the pandemic, identifying £48.5 million of “net Covid tailwind”. …

The company said the Topshop and Miss Selfridge brands as well as the activewear label HIIT, acquired from Sir Philip Green’s Arcadia empire for £330 million in February, had been “seamlessly” integrated into its online platform and had achieved “great early customer momentum”.

The number of active customers rose by 1.5 million to 24.9 million, which the company said was a good performance given the lockdown had led to fewer “event-led” reasons for people to shop for formal and occasionwear.

Last month, we reported on the damage done to the high street by the lockdowns and the tough restrictions in between. A study by the Local Data Company found that 11,000 shops permanently closed in the UK in 2020. This is expected to be followed by a further 18,000 closures in 2021.

The Guardian says this could be the tip of the iceberg.

The true impact of the pandemic has yet to become apparent. Many outlets included in the research were temporarily closed during lockdowns and were not counted as shut but may never reopen after restrictions are relaxed next month.

The report on online retail is worth reading in full.