For all the dialogue on the demise of high street shopping – which was under pressure even prior to the landslide triggered by Covid restrictions – the fact remains that brick and mortar outlets can make money, and online retailers can lose it. 

Online fashion purveyors hit a massive sweet spot when lockdown all but wiped out competition from traditional retailers for months at a time, but as last week’s high-profile collapse of Missguided has shown, the market is getting significantly tougher. Now set to join Sports Direct founder Mike Ashely’s Frasers Group, the business that was Missguided had issues of its management’s own making but was also toiling against industry-wide trends that have led some to question the future of online retail and that of fast fashion in particular. 

Melissa Minkow, director of retail strategy at digital consultancy CI&T, is among those predicting the end for most fast fashion labels as their reliance on cheap synthetic fabrics, dubious treatment of workers and resource-hungry processes clash with the post-pandemic zeitgeist for more tenable ways of living and working. 

“Consumers are shifting their buying habits significantly towards more sustainable options, and only a very small amount of fast brands will be able to last much longer,” she said. “This has been a crowded space for a while, and there are many retailers able to stay on trend without slashing their margins.” 

Manchester-based Missguided came to the fore about four years ago with its sponsorship of Love Island, with its range of “babewear” worn by the show’s contestants. It generated further headlines in 2019 with the launch of a bikini priced at just £1, sold at a loss to lure new consumers to its website. 

The black two-piece did stir up an internet sensation, though not entirely for reasons anticipated. Fast fashion critics on social media labelled it a symbol of the throwaway culture in which UK consumers bin about a million tonnes of clothing annually.

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While the seemingly enduring popularity of Primark proves that consumer conscience doesn’t hold absolute sway over spending patterns, there are definite signs that the tide is turning. For its eighth season Love Island has abandoned its fast fashion sponsors in favour of second-hand seller eBay as the reality programme’s bosses work towards becoming “a more eco-friendly production”. 

The lifting of lockdown restrictions and an accompanying surge in inflation driven in the first instance by supply chain constraints has created further undertows across the online fashion sector. Andrew Busby, retail industry lead at Software AG, points out that the cost-of-living crisis will only get worse as this year progresses and cuts further into non-essential spending. 

“The fast fashion generation is growing up – spending less, spending elsewhere, and having more of an eye on sustainability,” he said. “Together with diminishing consumer confidence, inflation and rising supplier costs have played an undeniable role on Missguided’s downfall.” 

Demand for less fitted casual wear translated into fewer online returns during lockdown, which kept down handling costs. Shoppers are now sending more items back, adding to the squeeze on margins from the rising cost of energy, fuel, fabrics and labour. 

Furthermore, fast fashion’s target consumers are suffering disproportionate financial pain from inflationary pressures. According to the latest income tracker produced by supermarket group Asda, discretionary income among those under the age of 30 was down by 26 per cent in April on the same period a year earlier, compared to a drop of just 11% for those aged 30 to 64. 

Missguided is certainly not the only retailer affected by these factors. Boohoo – which has hoovered up the intellectual property rights of former high street brands such as Debenhams, Dorothy Perkins and Burton – has said it will likely put up prices after its profits nearly halved during the year to the end of February. Higher return ratios, surging logistics costs and weakening consumer demand were all to blame.

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Meanwhile, rival Asos swung to pre-tax loss of £15.8m during the six months to February against a profit of £106.4m a year earlier as the explosion in online shopping has come crashing back down to reality. 

According to the Office for National Statistics, the proportion of non-fuel retail sales transacted online in the UK was slowly climbing before the pandemic and reached a bit more than 20% as of January 2020. It then shot up to 32.8% in May of that year before reaching a peak of 37.8% in January 2021. 

However, it has now fallen back to 26.4% as of April. 

It is difficult to predict where the balance between online and bricks and mortar will settle, but the plain fact is that nearly three-quarters of everything we buy is still purchased in shops and supermarkets. Meanwhile, traditional high street groups such as M&S, Next and Zara are successfully upping their online game, encroaching further on the pure internet players. 

Frasers Group has shelled out £20m for the intellectual property rights to Missguided, which was founded in 2009 by Nitin Passi. It will now be down to Michael Murray, Frasers’ newly-installed chief executive, to turn the business around. 

That could prove tough. Missguided went under with suppliers who say they are owed millions accusing the previous owners of “reckless” behaviour. Many customers are likewise out of pocket with orders undelivered and refunds unpaid. 

The optics from a public relations perspective are bad, but the task requires significantly more than a marketing overhaul. With its existing warehouse and delivery infrastructure Frasers should be able to cut down on costs, but if shoppers can’t or don’t want to spend their money on environmentally iffy clothing, there are limits to what can be achieved. 

The rag trade is an industry in flux, regardless of sales channel. Internal failings at Missguided made it the first high-profile casualty of the UK’s fast fashion websites, but further consolidation seems inevitable. Diversification, industry nous and sound business management will be the hallmarks of those left standing.