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Clothing Retailing Market Report 2002
Key Note Publications Ltd, January 2002
This report examines the highly-competitive UK clothing retailing industry, in which one retailer will gain at the expense of another. During 2000, the discount clothing sector led by Matalan PLC, TK Maxx PLC and Primark PLC, grew by almost 15% at the expense of mid-market retailers such as Marks and Spencer PLC (M&S) and Arcadia Group PLC. Inevitably, the latter fought back with their own price cuts and the investment of considerable resources to regain lost ground. It is this middle market that is now making progress, with Bhs Ltd and Arcadia Group PLC, in particular, showing impressive recoveries. The big corporate chains are claiming growing market share with fewer, but bigger, outlets. According to the Department of Trade and Industry (DTI), the largest shops and chains control about 75% of the clothing market. The growing involvement of the grocery multiples is certainly adding low-price capacity.
Shoppers have become more price-conscious and while global designer brands are still coveted, the infatuation with them during the 1980s and 1990s has now created a backlash, with consumers turning away from overt displays of wealth and choosing more discreet logos and branding. At the same time, European companies such as Hennes and Mauritz PLC, Zara and Mango are strengthening their hold on foreign markets, including the UK, and introducing mid-market global fashion brands. Meanwhile, Fast Retailing, one of Japan's best-performing retailers, entered the UK market in September 2001 with its Uniqlo stores that sell good-quality items at very low prices.
Retail sales in April 2002 saw the biggest monthly rise in more than 2 years. However, a smaller percentage of disposable income than ever is being spent on clothing, and clothing retailing features a high degree of discounting, curtailing potential growth.
Key Note anticipates that retail value for clothing garments is expected to grow by just 3% over the next year. In 2001, sales of women's clothing accounted for 54% of the total market value of sales, and the women's and girl's clothing sectors are expected to continue benefiting from the best rate of growth. Manufacturers and retailers are particularly targeting the 'tweenager' market of fashion-conscious 8 to 12 year-olds, and the efforts of Next PLC and Asda are provoking criticism from parents and children's charities.
Other controversies affecting the sector, include 'grey' market imports, trademark infringement, price-fixing and an alleged exploitation of labour. An impending rise in the minimum wage and a rise in National Insurance contributions may also prove difficult in the highly labour-intensive retailing market.