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Viewing report
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Clothing and Footwear Industry Market Review 2005
Key Note Publications Ltd, March 2005
The UK clothing and footwear market was worth £44bn at retail selling prices (rsp) in 2004. Whereas the 1980s and 1990s saw a decline in the proportion of disposable income spent on clothing, the market has grown strongly in the early 2000s, exceeding the overall increase in consumer expenditure.
The reasons for this recent recovery in spending include:
- the rising proportion of women who work full time and need wardrobes for both work and leisure
- the trend towards `dressing down' at work, which has paradoxically made people spend more on casual garments than they would need to spend on conventional formal clothing for the workplace
- a growing desire to wear designer brands (whether discretely or flamboyantly) instead of chain stores' own labels.
Growth has been achieved in spite of declining prices. Between 2000 and 2004, average prices across the clothing and footwear market fell by an estimated 11.5%, and prices for some items of womenswear (the most competitive market segment) fell by almost 20%. This is essentially the result of globalised sourcing. The UK has had high import ratios in both clothing and footwear for many years, and imports will probably account for over 95% of the total market by the end of 2005.
The best opportunities for British manufacturers lie in high-quality or technical clothing and footwear, and exports of these items are still valuable to the economy. Total UK exports of clothing and footwear came to £3.11bn in 2004, although imports were £13.13bn, resulting in a trade deficit of £10.02bn. However, things are not as bleak as these figures suggest, because many of the imported goods bear British labels and are manufactured overseas simply for cost reasons. For example, Marks & Spencer used to have a policy of sourcing mainly from domestic factories, but retail competition has now forced it to source more products from abroad.
Looking to the future, we forecast slower growth for the market between 2005 and 2007, with retailers having just been through one of the worst Christmas and New Year trading periods for many years. However, growth is expected to pick up in the second half of the forecast period, owing to the generally favourable consumer attitudes towards clothing and footwear, including a growing demand for quality and well-known brands from adults and, increasingly, from children and teenagers.
The market will continue to polarise between discount retailers and outlets specialising in premium-priced designer clothing, putting further pressure on mid-market retailers such as Marks & Spencer. However, the greatest threat to established clothing retailers will come from the grocery superstores, which are taking an increasing share of clothing sales and are even planning to open chains of non-food stores selling clothing.
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