Online channel not enough to prop up Matalan through devastating COVID-19 lockdown

Following today’s release of Matalan Q1 figures for 2020/21,

Sofie Willmott, Lead Retail Analyst at GlobalData, a leading data and analytics company, comments:

‘‘With Matalan’s stores only open for around five weeks of Q1, its underdeveloped online channel has not been strong enough to carry the value retailer through the COVID-19 crisis with total revenue almost £200m lower than the same period last year, at £75.3m. Its stores re-opened on 18th May giving Matalan a head start on its clothing rivals that could not open for another month, allowing it to test safety measures and gauge shopper interest, however demand in the last two weeks of the period will have been subdued, doing little to boost the overall quarter.

Matalan’s online performance has ramped up in recent years with FY2019/20 online sales rising 24% and digital channels accounting for a growing proportion of total sales. However, other non-food players (such as Next and John Lewis & Partners) that have prioritised a best-in-class online experience over a long period, driving high online penetration, have been able to rely on their digital channels much more so than Matalan. Despite this, by at least having an online proposition Matalan has been able to generate some revenue, unlike value rival Primark which was completely cut off for three months owing to its lack of transactional website. Shoppers who would have turned to Primark as their first port of call normally, may have instead shopped online at Matalan for urgent purchases, such as childrenswear.

With almost all of its stores located on retail parks, Matalan will have greater appeal amongst consumers who are seeking easily accessible locations and trying to avoid potentially crowded shopping destinations. Matalan’s wide range product range will also be attractive as those looking for clothing for the family and home items can get everything in one place without having to queue to enter different retailers’ stores. In addition, Matalan’s value proposition will resonate during this time of economic uncertainty giving it a more positive outlook than many midmarket players, despite its struggles through the lockdown period.”

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