We had previously covered how retailers can successfully deal with the Covid pandemic and chart out a road to recovery based on our learnings from China.

Southeast Asia, India & the Middle East are now 3-4 months into the pandemic and the crisis has impacted each of these regions in different ways; depending on the socio-economic factors, lockdown extensions and how the government in each region responded to the crisis.  

While there have been spikes in online commerce, especially around essentials in all of these regions, we wanted to dissect the in-store data of the 50+ brands across 10,000 stores in these regions to : 

  • Understand the overall retail impact of Covid-19 in Southeast Asia, India, China & the Middle East from March 2020 to May 2020
  • Do a deep dive on the current state of Apparel & Fashion industry in these regions
  • Analyse how consumers are shopping in these uncertain times

Impact of Covid on Southeast Asia’s Retail Market

At a broader level, the restaurant and hospitality segments in Southeast Asia have been badly hit. The Sales-Per-Store has been on a steady decline across retail over the last 3 months and plunged to more than 80% in the first week of May.
SEA Retail Drop

Surprisingly, the Apparel & Fashion sector in SEA has a relatively lower dip in sales and store footfalls are at 50% of pre-Covid levels. 

  • Covid Impact on Southeast Asia’s Apparel & Fashion Industry 

Apparel sales in SEA tanked during the peak of lockdown and the highest dip of 66% was observed at the end of March.  Overall, sales have been hovering around the 30% mark until the first week of May.

SEA Apparel Peak Dip

Finding 1 :

Within the Apparel segment, the footwear category is worst hit, with sales still lower by 65% as compared to last year

SEA Footwear Sales

Finding 2 : 

The second week of May saw a surge in Apparel sales (+6%), possibly due to a shift in Ramadan dates this year. 

SEA Apparel Retail Sales

Finding 3 : 

Customer footfall is still at approx 50% as compared to January and has remained stable from Mid-April to Mid-May.

SEA Retail Footfall

  • Key Insight

Correlating Finding 2 & 3, we predict that the worst may be over for the Apparel & Fashion industry (excluding footwear segment) in SEA and sales will continue to increase steadily over the next few weeks.

SEA Apparel Sales

Impact of Covid on India’s Retail Market

Channel-wise data indicate severe disruption for Indian retail brands with a sharp 60%+ drop in sales and footfalls have been at 36% of January even after the easing of lockdowns.

India Retail Sales

While grocery and essential sales are relatively less affected and should recover soon; food, hospitality and apparel brands may have to wait a while for sales to reach pre-Covid levels.

  • Covid Impact on India’s Apparel & Fashion Industry 

The apparel sector in India saw a severe slump during the lockdown, with sales grinding to zero for most of the brands. 

Finding 1 :

There has been a revival in apparel sales from Single Brand Outlets in the first two weeks of May

India Single Brand Retail Sales

Finding 2 : 

Sales data from the first two weeks of May indicate people are purchasing more number of lower-priced products, possibly in bulk quantities 

  • (+) Average Transaction Value, (+) Average Basket Size, (-) Average Product Price
    India Apparel Sales Drop
  • Key Insight

There have been some positive signals in terms of sales & customer footfalls in the first two weeks of May.  We expect it to sustain and improve as the lockdown restrictions are further eased.

Impact of Covid on Middle East Retail Market

The online food & grocery retail is experiencing a major surge in the Middle East with average sales increasing by 200% and Order Values increasing by 50%. However, the closure of malls resulted in almost 50-60% slump in sales across  F&B, Jewelry, Fashion & Luxury categories.

Amongst these worst-hit categories, the Luxury segment has seen a massive slump with sales dropping by 90% from the 1st week of April and footfalls hovering around 9% of what it was in the first week of January.
Middle East Luxury Retail

Middle East Luxury Retail Footfall

  • Covid Impact on Middle East Apparel & Fashion Industry 

The apparel market in the Middle East has shown a decline of -65% during the peak but there has been an uptick in sales during the first two weeks of May.

Middle East Apparel Sales

Finding 1 

Compared to January 1st week, store footfall levels are currently at 38% after hitting a peak slump of 20%.

Middle East Apparel Footfall

  • Key Insight : 

The surge in apparel sales during the first two weeks of May could be attributed to malls gradually reopening with reduced hours, and partial reduction in restrictions in the region. While it’s too early to make a conclusive prediction, our data hints at the early stages of a revival.

Impact of Covid on China’s Retail Market

Overall retail sales in China plunged 20% in March as it struggled to contain the pandemic. Our data revealed a drop of over 65% in Average Sales per Store between January & March.

Two months later, the country has seen a sharp drop in new coronavirus cases and consumers have started venturing back into malls and restaurants. Restaurants that have rolled out plans for curbing the risk of infection are now allowed to open and most of the stores have reopened, though big brands like IKEA and Apple Inc have restrictions on crowds.

  • Covid Impact on China’s Apparel & Fashion Industry 

From mid-April onwards, the sales per store which took a big hit during the lockdown are slowly coming back to pre-Covid levels. However, this differs from retailer to retailer – some have healthier sales than last year while others have fared worse.

China Apparel Sales

Finding 1 : 

Customer numbers (compared to the 1st week of Jan) indicate that around 70% of customers have come back to the store in the first two weeks of May.

China Retail Footfalls Covid

  • Key Insight : 

China seems closest to pre-Covid levels of sales and consumption amongst all countries. However, there have been shifts in consumer behaviour that brands will have to be cognizant of as they prepare for the new normal. 

The Way Ahead

While the worst may be over for retailers and brands, it will take some time for normalcy to set in. Until then, the key to surviving this crisis lies in sharing insights and learnings while adopting best practises from peers and partners across the globe. We would love to hear your thoughts and comments on how your brand is gearing up to face this challenge; do write to us at hello@capillarytech.com.

Dominic Machado