Shares in UK retailers Next PLC (LON:NXT) and Marks & Spencer PLC (LON:MKS) slumped after fourth quarter results from H&M highlighted the struggles bricks-and-mortar stores are facing.
Swedish fashion chain H&M reported a 4% decline in sales to 50.4bn Krona in the September to November period as fewer shoppers visited its stores.
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Consumers have been increasingly choosing the convenience of online shopping over visiting busy stores, posing a challenge for many retailers in adapting to the trend.
A survey by London-based market research and insights agency Trinity McQueen showed that 54% of shoppers do their Christmas shopping online.
H&M said a weak sales performance at its physical stores in the fourth quarter reflected "continued challenging market situation" due to the ongoing shift in the industry.
"In addition, there have been imbalances in parts of the H&M brand’s assortment composition," it added, signalling issues with its product ranges.
In response to the shift online, the company has decided to close more stores and open fewer new ones. It will also start selling the brand through Chinese online platform Tmall.
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"There is no outlook statement but Q4 sales trends and potential further inventory build warrant caution for the FY18 outlook," UBS said.
"Although we think expectations were low given a warm October, the shares are likely to trade lower, especially as risks to the dividend (1.1x cover in FY17E) seem to have increased."
Shares in H&M fell 15% to 170 Swedish Krona, the lowest level since 2009.
A negative read-across sent shares in M&S down 1.38% to 307p and Next down 2.16% to 4,298p in morning trading.