Mintel research on the nature of the U.K fashion market in 2011, highlighted the most relevant bits
Clothing Retailing - UK - October 2011
“As the
cross channel shopper emerges as a higher spending customer, every retailer
must ensure it doesn’t compete against itself by making stores and the website
equally relevant and compelling and by driving customer traffic in both
directions.
Although
certain inflationary pressures are about to annualise (input prices towards the
end of this year and VAT at the start of 2012) and that will ease pressure on
retailers’ margins, a gloomier outlook for young people could mean a gloomier
outlook for the clothing market unless better added value opportunities and
promotions are explored”.
– Hilary
Monk, Senior Retail Analyst
Strengths and Weaknesses
·
New players, new ideas – despite being such a competitive market in the UK
new entrants and formats are always a feature and latest ones to watch include Forever 21 and Kate Spade (both US) and Monki (part of H&M).
·
Weak pound – has
buoyed the tourist trade and helped to drive the top end of the market with
luxury houses reporting a strong bounce back in both clothing and footwear in
2010 and on into 2011.
·
Minimising price increases – despite significant inflationary pressures,
clothing retailers have managed to contain prices quite well for their hard
pressed customers although the flip side is squeezed margins. But companies
have adapted quickly by, for instance, cutting back on cotton lines and
relocating production and sourcing to markets with more stable costs.
·
Cost pressures easing – some input price rises have peaked and should
start to ease in 2012.
·
Online and multi-channel – have helped to overcome the challenges of
in-store stock availability delivering greater choice, convenience and
flexibility. The internet is now paving the way to faster and wider
international expansion with several retailers rolling out to countries across
the world.
·
Royal fashion
trends – the
Royal Wedding helped to re-ignite interest in designer fashions drawing attention to
latest trends and looks. The Duchess of Cambridge is also an aficionado of high
street names and the likes of Reiss, Whistles and LK Bennett have all benefited from ‘the Kate factor.
·
Evidence of trading up – our consumer research suggests some consumers are
trading up to better quality and/or fashionability as shopper numbers bucked
the trend and rose (albeit marginally) at House of Fraser, Zara, John Lewis, M&S, and Monsoon while most supermarkets and value stores saw
customer numbers contract.
Weaknesses
·
VAT rise and squeezed disposable incomes – are putting pressure on all
forms of discretionary spending and consumers are adapting their shopping
behaviour , focusing on their personal priorities and thinking very carefully
before parting with their cash.
·
Spending less – as many
as 51% of consumers said they were spending less on clothing in our July 2011
survey compared to 39% in August 2010 and significantly more people are buying
in the Sales (see The Consumer – How They Shop for Clothing).
·
Discounting –retailers
are having to respond to weakening demand with more deals, special offers, and
mid-season sales and anecdotal reports from retailers also point to consumers
wanting deeper discounts instantly.
·
Youth market – numbers
of 15-24 year-olds are set to decline by 4% over the next five years and
coupled with the lack of jobs and rising tuition fees this will put a strain on
retailers targeting this demographic and particularly those with less
affordable ranges.
·
Compromised shoppers – significant numbers of consumers still want to
see better stock availability and more choice of sizes and fittings in store
and there is evidence that it may be larger women who feel particularly
compromised here.
·
Cross channel options – in theory cross channel options can address some
of these challenges and add value to the consumer experience. However
compromised shoppers are more likely to come from the C2D socio-economic group,
a cohort less likely to have internet access. Moreover while this cross channel
model is becoming increasingly widespread and adding value for many consumers
it is also adding up-front cost for retailers.
·
Internet shopping flags – our research also shows that numbers of shoppers
using the internet to buy clothing has actually fallen this year which may be
connected to the fact that twice as many consumers think they can control their
spending better in-store than online. Medium to longer term the internet has
important implications around the adjustments retailers will need to make to
their overall business model.
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