Clothing Retailing - UK - October 2019

OVERVIEW 
What you need to know
Products covered in this Report
EXECUTIVE SUMMARY
The market
Consumer spending slows
Figure 1: Consumer spending on clothing and accessories, 2014-24
Clothing specialists outperform
Figure 2: Retail sales through specialist clothing retailers, 2014-24
Specialists regain market share
Figure 3: Estimated distribution of consumer spending on clothing, by type of retailer, 2019
Companies and brands
Inditex fastest growing specialist as it closes stores
Figure 4: Leading specialist retailers: compound annual growth in revenues, 2014-18
Slight slowdown in online fashion growth
Figure 5: Online sales of clothing, accessories and footwear, 2014-24
ASOS most recommended brand
Figure 6: Attitudes towards and usage of selected brands, February-September 2019
The consumer
People favour clothing specialists
Figure 7: Types of retailers used to purchase clothing in the last 12 months, August 2019
People buy more frequently
Figure 8: Frequency of clothing purchases in the last 12 months, August 2018 and August 2019
Women return clothes due to fit and size
Figure 9: Reasons for returning clothing purchased in the last 12 months, August 2019
Male 16-34s look for identifiable brands
Figure 10: Most important factors when choosing clothing brands to buy, August 2019
Female 16-34s like to treat themselves
Figure 11: Reasons for buying clothes, August 2019
Sales can be overwhelming
Figure 12: Shopping behaviour, August 2019
What we think
ISSUES AND INSIGHTS
Who are the winners and losers in clothing?
The facts
The implications
Dealing with the issue of returns
The facts
The implications
What are the opportunities for driving sales?
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Consumer spending slows
Womenswear once again dominates sector
Clothing specialists outperform
Online players grow the most
Garment price inflation drops again in August
Obesity rates rise among women
MARKET SIZE AND FORECAST
Consumer spending slows
Figure 13: Consumer spending on clothing and accessories, 2014-24
The future
Figure 14: Consumer spending on clothing and accessories, at current and constant prices, 2014-24
Share of total consumer spending
Figure 15: Spending on clothing and accessories as percentage of all consumer spending, 2015-19
Womenswear once again dominates sector
Figure 16: Estimated breakdown of consumer spending on clothing and accessories, 2019
Figure 17: Estimated breakdown of consumer spending on clothing and accessories, 2017-19
Forecast methodology
SECTOR SIZE AND FORECAST
Clothing specialists outperform
Figure 18: Retail sales through specialist clothing retailers, 2014-24
Figure 19: Retail sales through specialist clothing retailers, at current and constant prices, 2014-24
Clothing sales through specialist clothing retailers
Figure 20: Sales of clothing and accessories through specialist clothing retailers, 2014-19
Figure 21: Clothing specialists share of consumer spending on clothing and accessories, 2014-19
Forecast methodology
CHANNELS OF DISTRIBUTION
Ongoing shifts in where people shop for clothing
Specialists regain market share but market grows increasingly challenging
Non-specialists continue to underperform
Growing sectors
Figure 22: Estimated distribution of consumer spending on clothing, by type of retailer, 2019
Figure 23: Estimated distribution of consumer spending on clothing, by type of retailer, 2015-19
MARKET DRIVERS
Inflation steady but clothing prices drop
Figure 24: Consumer price inflation, 2008-18
Garment price inflation drops again in August
Figure 25: Consumer price inflation, August 2018-August 2019
Real wage growth remains strong
Figure 26: Real wage growth – Average weekly earnings vs inflation, January 2016-August 2019
Consumer confidence dips
Figure 27: Consumer financial confidence, January 2017-August 2019
Clothing is still popular for disposable income spend
Figure 28: Trends in what extra money is spent on, September 2018 and September 2019
Catering to an ageing population
Figure 29: Trends in the age structure of the UK population, 2016-26
Obesity rates rise among women
Figure 30: Overweight and obesity prevalence in the UK population, 2013-17
Young consumers share photos and video
Figure 31: Online activities done in the last three months on any device*, June 2018
Instagram usage rises
Figure 32: Recent social media network usage, April 2018 and March 2019
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Clothing specialists show signs of recovery…
…while non-specialists continue to face problems
Online pure players continue to outperform
Online consumer spending set to reach £35.4 billion by 2024
Sector advertising spend up 44.3% year-on-year
Despite declining revenues, M&S remains most trusted and unique
LEADING SPECIALISTS
Next maintains leadership and reverses declining sales
Figure 33: Leading specialist retailers: net revenues, 2014-18
Increasingly polarised performance
Figure 34: Leading specialist retailers: compound annual growth in revenues, 2014-18
Outlet numbers and sales per outlet
Figure 35: Leading specialist retailers: outlet numbers, 2014-18
Sales per outlet
Figure 36: Leading specialist retailers: estimated annual sales per outlet, 2014-18
Sales area and sales densities
Figure 37: Leading specialist retailers: total sales area, 2014-18
Figure 38: Leading specialist retailers: estimated annual sales per square metre, 2014-18
Operating profits and margins
Figure 39: Leading specialist retailers: operating profits, 2014-18
Figure 40: Leading specialist retailers: operating margins, 2014-18
LEADING NON-SPECIALISTS
Sports retailers
Department stores
Supermarkets major players
Online retailers
Figure 41: Leading non-specialists: estimated clothing and footwear revenues, 2014-18
MARKET SHARES
Figure 42: Leading retailers’ estimated share of spending on clothing and footwear, 2014-18
Change in market shares
Figure 43: Leading clothing retailers, change in share of clothing spending, 2014-18
SPACE ALLOCATION SUMMARY
Men’s, women’s and childrenswear overview
Figure 44: Men’s, women’s and childrenswear overview, September 2019
Figure 45: Men’s, women’s and childrenswear overview, September 2019
Detailed category space allocation
Figure 46: Specialist and non-specialist clothing retailers, estimated detailed space allocation, by category, September 2019
Figure 47: Specialist and non-specialist clothing retailers, estimated detailed space allocation by category, September 2019
Figure 48: Specialist and non-specialist clothing retailers, estimated detailed space allocation by category, September 2019
Clothing vs non-clothing space
Figure 49: Primark beauty services, Birmingham, September 2019
Figure 50: Specialist and non-specialist clothing retailers, estimated clothing versus non-clothing space, September 2019
RETAIL PRODUCT MIX
Figure 51: Leading clothing retailers, estimated sales, by product, 2018
Figure 52: Leading clothing retailers: share of clothing sales, by product, 2018
Womenswear
Figure 53: Leading clothing retailers estimated share of the womenswear market, 2018
Menswear
Figure 54: Leading clothing retailers estimated share of the menswear market, 2018
Childrenswear
Figure 55: Leading clothing retailers estimated share of the childrenswear market, 2018
ONLINE
Slight slowdown in online fashion growth
Figure 56: Online sales of clothing, accessories and footwear, 2014-24
Figure 57: Online sales of clothing, accessories and footwear, at current and constant prices, 2014-24
Online spending on clothing and accessories set to rise 15.1% in 2019
Figure 58: Breakdown of online sales of clothing, accessories and footwear, 2014-19
Where they shop online
Figure 59: Retailers used to purchase clothing online in the last 12 months, August 2019
Forecast methodology
LAUNCH ACTIVITY AND INNOVATION
AI-driven stress-free clothes shop
Sustainable fashion
Fashion free from animal-derived components
Virtual catwalk experience
Figure 60: Zalando pop-up store in Madrid, October 2019
Pop-ups
Menswear rental service
ADVERTISING AND MARKETING ACTIVITY
Sector advertising spend up 44.3% year-on-year
Figure 61: Total recorded above-the-line advertising expenditure on clothing and accessories, 2014-18
Shein the top advertiser
Figure 62: Total recorded above-the-line, online, display and direct mail total advertising expenditure on clothing and accessories, by leading top 20 spenders, 2014-18
51% of advertising expenditure channelled through digital media
Figure 63: Total recorded above-the-line advertising expenditure percentage on clothing, by media type, total market, 2018
Key campaigns
Marks & Spencer launch two separate Christmas campaigns in 2018
adidas and Nike World Cup campaigns
JD Williams A/W18 campaign featuring real women alongside models
River Island focus on diversity
Nielsen Ad Intel coverage
BRAND RESEARCH
What you need to know
Brand map
Figure 64: Attitudes towards and usage of selected brands, February-September 2019
Key brand metrics
Figure 65: Key metrics for selected brands, February-September 2019
Brand attitudes: Primark and Peacocks offer good value
Figure 66: Attitudes, by brand, February-September 2019
Brand personality: Whistles seen as the most exclusive
Figure 67: Brand personality – Macro image, February-September 2019
Primark and Peacocks are both perceived as basic
Figure 68: Brand personality – Micro image, February-September 2019
Brand analysis
The market leaders in sales: Next and M&S
Home shopping retailers: ASOS and Very
Value retailers: Primark and New Look
Fast fashion retailers: Topshop/Topman, H&M and Zara
ARCADIA GROUP
What we think
Arcadia focuses on online and physical stores
Arcadia Group continues to suffer substantial losses
Shop Direct and Next to launch Topshop/Topman ranges
Focus remains spread over too many brands
Company background
Company performance
Figure 69: Arcadia Group: group financial performance, 2012/13-2017/18
Figure 70: Arcadia Group: outlet data, 2012/13-2017/18
Retail offering
ASDA GROUP 
What we think
Merger deal with Sainsbury’s blocked
Inspirational in-store digital signage scheme to be expanded to more supermarkets
Buy now pay later
Stepping up production of eco-friendly garments
Company background
Company performance
Figure 71: Asda Group Ltd: group financial performance, 2014-18
Figure 72: Asda Group Ltd: outlet data, 2014-18
Retail offering
ASOS
What we think
Getting tough on ‘serial returners’
Bolstering CSR credentials with charity shop initiative
Making shopping online for clothing easier
Tailored experience for specific markets
Becomes the latest fashion retailer to introduce its own homewares collection
Company background
Company performance
Figure 73: ASOS: group financial performance, 2013/14-2017/18
Retail offering
DEBENHAMS
What we think
New exclusive womenswear and menswear brands to draw customers in
Improving the in-store fashion experience
Using mobile to balance online and offline offering
Bolstering sustainable fashion credentials
Company background
Company performance
Figure 74: Debenhams: group financial performance, 2013/14-2017/18
Figure 75: Debenhams: outlet data, 2013/14-2017/18
Retail offering
EDINBURGH WOOLLEN MILL GROUP
What we think
Experimenting with a department store format
Bonmarché bolsters mature market proposition
Peacocks ditching plastic to reduce its environmental footprint
Company background
Company performance
Figure 76: Edinburgh Woollen Mill Group and selected brands: group financial performance, 2013/14-2017/18
Figure 77: Edinburgh Woollen Mill Group and selected brands: estimated outlet data, 2013/14-2017/18
Retail offering
GRUPO INDITEX
What we think
Growth from a combination of online and offline channels
Diversification and dedicated content on social channels
Inditex’s new strategy focuses on sustainability
Company background
Company performance
Figure 78: Grupo Inditex: sales and outlets by format, 2018/19
Figure 79: Grupo Inditex, performance by brand, 2017-19
Figure 80: Grupo Inditex: group financial performance, 2013/14-2018/19
Figure 81: Grupo Inditex: outlet data, 2013/14-2018/19
Retail offering
H&M HENNES & MAURITZ
What we think
Digital
Store development
Company background
Company performance
Figure 82: H&M Hennes & Mauritz: group financial performance, 2013/14-2017/18
Figure 83: H&M Hennes & Mauritz: outlet data, 2013/14-2017/18
Retail offering
HOUSE OF FRASER 
What we think
What Sports Direct says
What has Sports Direct done?
Adverse effect on clothing concessions
Where next?
Doubts
Future unclear
Company background
Company performance
Figure 84: House of Fraser Plc: group financial performance, 2012/13-2018/19
Figure 85: House of Fraser Plc: outlet data, 2012/13-2018/19
Retail offering
JOHN LEWIS PARTNERSHIP
What we think
John Lewis & Partners line
John Lewis undergoes substantial store overhaul
Six start-ups shortlisted for in-store innovation scheme
Where next?
Company background
Company performance
Figure 86: John Lewis Partnership: group financial performance, 2014-19
Figure 87: John Lewis Partnership: outlet data, 2013/14-2018/19
Retail offering
MARKS & SPENCER
What we think
Recent performance
Progress
It all takes time
Online
Where next?
Company background
Company performance
Figure 88: Marks & Spencer: group financial performance, 2014/15-2018/19
Figure 89: Marks & Spencer: outlet data, 2014/15-2018/19
Retail offering
MATALAN 
What we think
Improved in-store experience
Enhanced online journey driving ecommerce sales
Click-and-collect convenience
Range extension with new affordable own beauty brand
Menswear brand ambassador
Company background
Company performance
Figure 90: Matalan Ltd: group financial performance, 2014/15-2018/19
Figure 91: Matalan Ltd: outlet data, 2014/15-2018/19
Retail offering
NEW LOOK GROUP
What we think
Focusing on womenswear
Bolstering its value-led pricing positioning
Enriched multichannel proposition
Exploring third-party ecommerce opportunities to offset shuttered international stores
Vegan accessory and footwear collection
Company background
Company performance
Figure 92: New Look Retail Group: financial performance, 2017/18-2018/19
Figure 93: New Look Group Plc: outlet data, 2014/15-2018/19
Retail offering
NEXT GROUP
What we think
Next improves handling of returns as ‘normal part of doing business’
Choice as a driver for growth
Increasing profitability of the store estate
Next launches Platform Plus
Where next
Company background
Company performance
Figure 94: Next Group: group financial performance, 2013/14-2018/19
Figure 95: Next Group: outlet data, 2013/14-2018/19
Retail offering
PRIMARK/PENNEYS
What we think
European expansion continues
Offline business model could hold back growth
Greater focus on experience could point the way forward
Growing sentiment against fast fashion is forcing change on the business
Where now?
Company background
Company performance
Figure 96: Primark/Penneys: group financial performance, 2014/15-2018/19
Figure 97: Primark/Penneys: outlet data, 2014/15-2018/19
Retail offering
RIVER ISLAND 
What we think
Negotiating with landlords to slash store rents
Celebrity collaborations to drive sales
New womenswear brand to appeal to 40-plus age group
Slick new social shopping experience
Combating the problem of overstocking and discounting
Company background
Company performance
Figure 98: River Island Holdings Limited: group financial performance, 2014-2018
Figure 99: River Island Clothing Co Ltd: outlet data, 2014-18
Retail offering
TESCO
What we think
Repurposing stores to expand F&F clothing range in its larger stores
Selected F&F womenswear items on Next.co.uk
Company background
Company performance
Figure 100: Tesco Plc: group financial performance, 2014/15-2018/19
Figure 101: Tesco Plc: outlet data, 2014/15-2018/19
Retail offering
TJX UK (TK MAXX)
What we think
Brexit forces changes in way company operates
TJX shifts TK Maxx store opening focus to Europe and HomeSense
Where now?
Company background
Company performance
Figure 102: TK Maxx UK: financial performance, 2014/15-2018/19
Figure 103: TK Maxx UK: outlet data, 2014/15-2018/19
Retail offering
ZALANDO
What we think
Selling more products, slower revenue growth
Zalando continues to succeed by combining online and offline
Zalando’s circular fashion joins the physical world
Zalando expands beauty range to five new markets
Average basket size is still decreasing
Zalando Plus loyalty scheme expanded
Zalando trials robots for customer orders
Moving away from own brands
What next?
Company background
Company performance
Figure 104: Zalando: group financial performance, 2013-18
Figure 105: Zalando: key metrics, 2016-H1 2019
Retail offering
THE CONSUMER – WHAT YOU NEED TO KNOW
New jeans trends drive purchasing
People favour clothing specialists
Men aged under-35 shop more often
68% of female under-25s return clothes
Young Millennials opt for brands that care
Female 16-34s like to treat themselves
Sales can be overwhelming
WHAT THEY BUY
Footwear sees biggest fall
Figure 106: Fashion items purchased in the last three months, June 2018 and June 2019
New jeans trends drive purchasing
Figure 107: Outerwear items purchased in the last three months, June 2017 and June 2019
Young women buy less
Figure 108: Number of clothing items purchased on most recent shopping trip, by age, June 2019
Women spend more per trip
Figure 109: Amount spent on most recent clothing shopping trip, by gender, June 2019
WHERE THEY SHOP
People favour clothing specialists
Figure 110: Types of retailers used to purchase clothing in the last 12 months, August 2019
M&S number one fashion retailer
Figure 111: Retailers used to purchase clothing in the last 12 months, August 2019
Almost three quarters shop online
Figure 112: Types of retailers used to purchase clothing in the last 12 months, by channel, August 2019
Who is driving growth?
Figure 113: People who have bought clothes for themselves in-store and/or online or have not bought clothes in the last 12 months, by gender and age, August 2019
Young shop around
Figure 114: Repertoire of retailers used to purchase clothing in the last 12months, by channel, August 2019
CUSTOMER PROFILES
John Lewis biased towards men
Figure 115: Retailer customer profile, by gender, August 2019
River Island reaches out to older women
Figure 116: Retailer customer profile, by age, August 2019
New Look looks to regain less affluent customers
Figure 117: Retailer customer profile, by socio-economic group, August 2019
Figure 118: Retailer customer profile, by location type, August 2019
FREQUENCY OF PURCHASES
People buy more frequently
Figure 119: Frequency of clothing purchases in the last 12 months, August 2018 and August 2019
Men aged under-35 shop more often
Figure 120: Frequency of clothing purchases in the last 12 months, by gender, August 2019
Online shoppers buy even more frequently
Figure 121: Frequency of clothing purchases in the last 12 months, by how they bought clothing, August 2019
Most affluent shop most often
Figure 122: Frequency of clothing purchases in the last 12 months, by socio-economic group, August 2019
REASONS FOR RETURNING CLOTHES
Two fifths return clothes
Figure 123: Proportion of consumers who have returned clothes, August 2019
68% of female under-25s return clothes
Figure 124: Proportion of consumers who have returned clothes, by age, August 2019
Women return clothes due to fit and size
Trying before buying
Figure 125: Reasons for returning clothing purchased in the last 12 months, August 2019
MOST IMPORTANT FACTORS WHEN CHOOSING BRANDS
Male 16-34s look for identifiable brands
Figure 126: Most important factors when choosing clothing brands to buy, August 2019
Young Millennials opt for brands that care
Figure 127: Most important factors when choosing clothing brands to buy, by generations, August 2019
Young men want limited-edition styles
REASONS FOR BUYING CLOTHES
Female 16-34s like to treat themselves
Figure 128: Reasons for buying clothes, August 2019
Women want new clothes when weather changes
Figure 129: Reasons for buying clothes, by gender, August 2019
ATTITUDES TO SHOPPING FOR CLOTHING
Figure 130: Attitudes to shopping for clothing, August 2019
Shoppers enjoy updates but buy items that don’t go out of style quickly
Figure 131: UK: Selected attitudes to shopping for clothing, August 2019
There is social pressure to buy branded clothes but sales can be overwhelming
Figure 132: Selected attitudes to shopping for clothing, August 2019
Providing a pleasant shopping experience remains key
Figure 133: Selected attitudes to shopping for clothing, August 2019
Attitudes by specialist retailer used
Figure 134: Attitudes to shopping for clothing, by where they shopped in the last 12 months: specialists, August 2019
Attitudes by non-specialist used
Figure 135: Attitudes to shopping for clothing, by where they shopped in the last 12 months: non-specialists, August 2019
Shopping experience is most important for Millennials and in the city
Figure 136: Clothing retailing – CHAID – Tree output, August 2019
Figure 137: Clothing retailing – CHAID – Table output, August 2019
Methodology
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
APPENDIX – MARKET/SECTOR SIZE AND FORECAST
Forecast methodology
Best- and worst-case forecasts
Figure 138: Consumer spending on clothing, best- and worst-case forecast, 2019-24
Figure 139: Retail sales through specialist clothing retailers, best- and worst-case forecast, 2019-24
Figure 140: Online sales of clothing, accessories and footwear, best- and worst-case forecast, 2019-24