|
|
 |
|
Viewing report
|
|
|
|
UK Clothing and Footwear Market Review
Key Note Publications Ltd, Jan 2001
Introduction
Although a basic requirement for human existence, clothing and footwear accounts for a declining share of consumer spending, both in the UK and other developed economies.
In 2000, UK consumers spent £34.15bn on clothing and footwear. Although this makes it a massive market, as a share of all consumer spending it has declined to 5.8% from 6.3% in 1996.
Products for women and girls constitute the largest market sector in general clothing, but sales of sports clothing are biased towards men and boys.
Price Deflation
The key trend in the clothing and footwear market in recent years has been the tendency for retail prices to fall during a period of generally low inflation in the UK.
Between 1996 and 2000, the UK's all-items consumer price index rose by 10%, but clothing and footwear prices fell by 7%. Within this average for all clothing and footwear, some items maintained their market value better than others (e.g. sports clothing and accessories), but the largest market sector, women's outer wear, saw prices decline by 16% over 5 years.
Import Penetration
Intense competition in the High Street has contributed to the pricing pressures, but the principal cause has been a further shift to imports at a time when sterling is riding high on currency markets. Rising import penetration has been a major factor in the market for over 50 years, but the late 1990s brought substantial increases.
The higher imported share of the market has been driven by price competition, with low-cost labour a major factor. The use of cheap labour in clothing manufacture has always been a factor, but the 1990s saw production for global distribution shifting to even cheaper bases, sometimes involving sub-contracting by countries whose economies have developed beyond the low-cost stage.
Overall, the range of countries exporting to the UK is broader than ever, from traditional suppliers such as Hong Kong (for clothing) and Italy (for footwear), to newer bases such as Turkey, Morocco, Romania, Thailand and Indonesia.
Changes IN Shopping Patterns
Along with price deflation and rising imports, the late 1990s brought another profound change to this market, in terms of consumer preferences for shopping.
Since 1998, there has been a highly publicised decline at Marks and Spencer, which, despite still being the UK's largest clothing retailer, has struggled to retain popularity with the younger generation of shoppers. Although Marks and Spencer has been given most of the media coverage there has, however, been a broader, underlying movement away from the general clothing outlet, selling broad ranges of unbranded (or own label) clothing for the whole family.
This movement led to the dramatic decision of C&A, a Dutch-owned group which was formerly one of the top clothing retailers in the UK, to quit the UK entirely in 2000. Other traditional general clothing retailers, such as the BhS and Littlewoods chains of department stores, have also had poor results. Even some of the largest fashion multiples have struggled against the combination of falling prices and demand for sports and designer brands. Sears - once the UK's largest footwear retailer and a major owner of fashion stores - was broken up in the late 1990s, and restructuring is under way at Arcadia Group, the High Street market leader with 2,500 fashion shops (including Top Shop, Burton, Dorothy Perkins and Evans).
Some multiple retailers, such as Next and New Look, have managed to grow during a difficult period, but the fact that UK consumers are prepared to spread their shopping across a very wide range of outlets is illustrated in Key Note's survey for this report.
Traditional outlets retain their appeal. It is notable in Key Note's research that department stores, which have a long heritage in selling clothing and footwear (particularly branded clothing through in-store concessions), are used by almost three-quarters of adults, which is ten times more than the share gained so far by the Internet.
Online shopping will have to make significant strides to reach a position among even the top ten channels. Sports shops, such as the JJB chain, were the main outlets making gains during the 1990s. By the end of the decade, however, the ever-growing forces of grocery superstores were having the significant impact an increasing proportion of general clothing for the family is now bought through Tesco, Sainsbury or Asda, rather than through variety stores.
Shrinkage IN UK Production Capacity
The increase in import penetration has made it impossible for many large-scale UK manufacturers to survive, even where they have set up factories or contracted some work to low-cost labour countries. Profitability has been hit by falling market share for UK factories, and even more so by the recent failure of clothing and footwear prices to keep up with the general level of price inflation in the economy.
The accelerated decline in the late 1990s was punctuated by regular announcements of factories being closed or large redundancies being made across UK clothing manufacturing. The UK's two largest clothing companies, Coats Viyella and Courtaulds Textiles, went through major restructuring. At Courtaulds, more than a dozen UK factories have either been closed or reduced in capacity in recent years, and the company was acquired by Sara Lee Corporation in 2000. At Coats Viyella, a world leader in making thread for sewing, many of the UK clothing subsidiaries (or their factories) have been either sold or closed down production has been refocused on a few core brands such as Jaeger and Viyella.
The problems of import penetration and unprofitable pricing have been exacerbated by a change in policy at Marks and Spencer, which until recently sourced over 90% of its 'St Michael' own label - the only label sold in the stores - from UK factories. This policy change affected most major manufacturers, including Courtaulds Textiles and Coats Viyella. Smaller companies have suffered even more from Marks and Spencer's loss of market share and its sourcing outside the UK, since they relied even more heavily on their Marks and Spencer contracts. Among the many long-established suppliers reliant on Marks and Spencer are William Baird, Dewhirst and SR Gent.
The footwear sector suffered from high and rising imports much earlier than most clothing sectors, and UK capacity was severely reduced by the mid-1990s. The two outstanding producers left, with production within and outside the UK, are both private companies: C&J Clark, and R Griggs Group. 'Clarks' is a general footwear producer and also the UK's largest retailer of footwear, mainly through Clarks, K Shoes and Ravel outlets. The Griggs group of companies makes the famous Dr Marten brand of heavy shoes and boots which have crossed over from industrial use into fashion.
Exporting Opportunities
Ironically, the period of rising import penetration has not necessarily deterred UK manufacturers as exporters, because the exporting comes mainly from smaller, specialised companies.
The export ratio of production reached its all-time peak in UK clothing in 2000, at 59% of the value of UK production. In footwear, exports peaked in the mid-1990s but are estimated to have stayed at around 50% in recent years, compared to 42% in 1993.
The specialist activities continue to thrive because they involved skilled workmanship and the production of famous, quality brands in clothing and footwear. Areas of strength include tailored shirts, accessories and safety footwear.
Preference FOR International Brands
Where UK companies have made progress in exporting, it is usually because they possess brands which are famous in other countries, particularly as luxury or specialised brands.
There has been an international trend towards buying clothing and footwear brands with sports or designer labels, and this factor has also undermined the retailers such as Marks and Spencer and C&A, which rely on the profit margins produced by selling only their own label.
A consumer survey for Key Note in 2001 found that the 'big three' sports wear brands had each been bought by a high proportion of UK adults in 2001: a 42% score for Nike, 41% for adidas and 38% for Reebok. Among younger age groups, penetration for these brands rose much higher for example, 70% of 16 to 24 year-olds bought at least one Nike product in 2000. These brands are not usually bought for active sport, but as fashionable leisure wear.
The sports brands were the engine behind a move towards buying clothing by brand, rather than by store name, in the late 1990s. The young, affluent and fashion-conscious still appreciate sports-based brands but they have also moved on to buying designer brands from couture houses. Calvin Klein is the most successful example of a designer name which has crossed over into the mainstream, mainly by targeting the branded underwear market. The Key Note survey found that nearly a third of adults had bought a Calvin Klein product in 2000.
Many of the famous names which were once only associated with the catwalks at international fashion shows are now openly advertised in the UK media as general ranges of clothing and footwear at accessible prices.
Market Prospects
UK manufacturing of clothing and footwear appears to be destined to dwindle down to a small fraction of its former size if current trends continue. Market potential will therefore come from the domestic retail market, although the current period of price deflation does not augur well in the near future. Key Note forecasts a better period of growth than the 1996 to 2000 period, assuming that prices will firm up (against a background of higher inflation in the economy generally).
Apart from the pricing issue, the major underlying trends affecting the apparel markets in the next few years will be extensions of the important changes which started to impact in the late 1990s:
The ongoing trend towards more casual dress being acceptable, even in the workplace 'dressing down'.
Demand for quality, branded casual clothing and footwear, offsetting the danger of dressing-down leading to scruffiness.
Adaptation of materials technology for sports and leisure wear and footwear.
Changes in the retailing structure, where there will be more emphasis on stores which sell specifically manufacturer-branded ranges (including designer labels and sports brands), together with more family clothing being bought from superstores.
Customers who bought this item also bought
Clothing & Footwear Industry Market Review 2008
Sports Clothing and Footwear Market Report 2009
Clothing and Footwear Industry Market Review 2005
Sports Clothing and Footwear Market Report 2003
UK Retail Futures: Clothing & Footwear 2012
UK Retail Briefing with Focus on Clothing and Footwear
Clothing and Footwear Industry Market Review 2006
UK Footwear Retailers 2009
UK Footwear Retailers 2008
Sports Clothing & Footwear Market Report 2005
Sports Clothing and Footwear Market Report
UK Sports Retail 2008
|
|
|
|
