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Clothing Retailing - UK - October 2016

OVERVIEW
What you need to know
Products covered in this Report
EXECUTIVE SUMMARY
The market
Clothes sales to be hit by low growth of 1.8% in 2016
Figure 1: Best- and worst-case forecast for consumer spending on clothing and accessories (incl. VAT), 2011-21
Specialists’ share of clothing spend declines further
Figure 2: Clothing specialists’ estimated share of spending on clothing, 2011-16
Companies and brands
Over half of the top players are non-specialists
Boohoo and Missguided benefit from cutting-edge image
Figure 3: Attitudes towards and usage of selected brands, January-August 2016
The consumer
M&S sees declining in-store female shoppers
Figure 4: Retailers from which clothes are bought both in-store and online, July 2016
Young men buy clothes most often
Figure 5: How often consumers have bought clothes in the last 12 months, July 2016
Half of women treat themselves to clothes
Figure 6: Reasons consumers have bought clothes for themselves in the last 12 months, July 2016
Growing interest in Made in Britain clothes
Figure 7: Agreement with attitudes towards buying clothes, July 2016
End to seasonal clothes
Figure 8: Agreement with attitudes towards shopping for clothes, July 2016
What we think
ISSUES AND INSIGHTS
How has the clothing sector performed in 2016?
The facts
The implications
Who are the winners and losers in clothing?
The facts
The implications
What are the opportunities for driving sales in the sector?
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Deepening deflation
Consumer confidence only dips slightly post-Brexit
Clothes sales to be hit by low growth of 1.8% in 2016
Consumers cut back on clothing as share of total spend
Menswear drives growth
Clothing specialists’ sales to drop 4%
MARKET DRIVERS
Deepening deflation
Figure 9: Consumer prices inflation for garments, Aug 2015-Aug 2016
Figure 10: Consumer prices inflation for garments, 2005-15
Figure 11: Consumer prices inflation for accessories and footwear, Aug 2015-Aug 2016
Inflation versus spending growth
Figure 12: Annual percentage change in spending on clothing (including accessories) versus annual percentage change in consumer prices inflation in clothing, 2012-15
Obesity levels
Figure 13: Proportion of overweight and obese population, by gender, 2009-14
Consumer confidence only dips slightly post-Brexit
Figure 14: Trends in consumer sentiment for the coming year, January 2015-August 2016
Implications of a drop in young consumers
Figure 15: Trends in the age structure of the UK population, 2010-20
25-44s drive clothing sales
Catering to an ageing population
MARKET SIZE AND FORECAST
Clothes sales to be hit by low growth of 1.8% in 2016
Figure 16: Best- and worst-case forecast for consumer spending on clothing and accessories (incl. VAT), 2011-21
The future
Figure 17: Consumer spending on clothing and accessories (incl. VAT) at current prices, 2011-21
Consumers cut back on clothing as share of total spend
Figure 18: Spending on clothing and accessories as percentage of all consumer spending, 2011-16
Menswear drives growth
Figure 19: Estimated distribution of spending on clothing, by sub-category, 2016 (est)
Forecast methodology
The impact of the EU referendum vote
Clothing spend has been resilient in previous slowdowns
Figure 20: Alternative market scenarios for the post-Brexit clothing and accessories market, at current prices, 2016-21
Figure 21: Detailed Post-Brexit scenarios for the clothing and accessories market, at current prices, 2016-21
Clothing is struggling, but not as a result of Brexit
Consumers prioritised clothing over leisure previously
Women continued to spend post-recession
SECTOR SIZE AND FORECAST
Clothing specialists’ sales to drop 4%
Figure 22: Best- and worst-case forecast of clothing specialists’ sector sales (incl. VAT), 2011-21
Figure 23: Clothing specialist sales (incl. VAT), 2011-21
Specialists’ sales of clothing
Figure 24: Estimated sales of clothing by clothing specialist retailers (incl. VAT), 2011-16
Specialists’ share of clothing spend declines further
Figure 25: Clothing specialists’ estimated share of spending on clothing, 2011-16
KEY PLAYERS – WHAT YOU NEED TO KNOW
Next moves into the lead
Retailers with strong lifestyle brands outperform
Over half of the top players are non-specialists
M&S sees its share of clothing decline further
Supermarkets develop their clothing ranges
ASOS is the brand with the highest level of recommendations
LEADING SPECIALIST RETAILERS
Next moves into the lead
Figure 26: Leading specialist retailers: net revenues, 2011-15
Retailers with strong lifestyle brands outperform
Figure 27: Leading 20 specialist retailers: compound annual growth in revenues, 2011-15
Outlet numbers and sales per outlet
Figure 28: Leading specialist retailers: outlet numbers, 2011-15
Sales per outlet
Figure 29: Leading specialist retailers: annual sales per outlet, 2011-15
Sales area and sales densities
Figure 30: Leading specialist retailers: total sales area, 2011-15
Figure 31: Leading specialist retailers: annual sales per sq m, 2011-15
Operating profits and margins
Figure 32: Leading specialist retailers: operating profits, 2011-15
Figure 33: Leading specialist retailers: operating margins, 2011-15
MARKET SHARES
Over half of the top players are non-specialists
Figure 34: Leading retailers’ share of spending on clothing and footwear, 2013-15
M&S sees its share of clothing decline further
Figure 35: Marks & Spencer’s share of spending on clothing and footwear, 2008-15
LEADING NON-SPECIALIST RETAILERS
Figure 36: Leading non-specialist retailers: net clothing and footwear revenues, 2013-15
Online-only retailers see strong sales
Figure 37: Retailers from which clothes have been bought in the last 12 months, in-store or online, July 2016
CHANNELS OF DISTRIBUTION
Grocers and pureplays gain share
Figure 38: Estimated distribution of consumer spending on clothing, by value, 2014-16
Specialists lose share further
Figure 39: Clothing specialists’ estimated share of spending on clothing, 2011-16
SPACE ALLOCATION SUMMARY
Gender split
Figure 40: Specialist and non-specialist clothing retailers, estimated space allocation by men’s, women’s and children’s wear, October 2016
Detailed category space allocation
Figure 41: Specialist and non-specialist clothing retailers, estimated detailed space allocation by category, October 2016
Figure 42: Specialist and non-specialist clothing retailers, estimated detailed space allocation by category, October 2016
Clothing versus non-clothing space split
Figure 43: Specialist and non-specialist clothing retailers, estimated clothing versus non-clothing space, October 2016
RETAIL PRODUCT MIX
Figure 44: Leading retailers of clothing, estimated sales mix, 2015
Figure 45: Leading clothing retailers, share of clothing sales by product, 2015/16
Figure 46: Leading clothing retailers, estimated sales density by product, 2015/16
Figure 47: Leading clothing retailers, share of product markets, 2015/16
ONLINE
Online clothing market to reach £12.8 billion
Figure 48: Estimated online sales of clothing and footwear (incl. VAT), 2013-16
Online market shares
Figure 49: Estimated market shares of online sales of clothing and footwear, 2015
Where consumers shop online
Figure 50: Retailers from which clothes were bought in the last 12 months online, July 2016
LAUNCH ACTIVITY AND INNOVATION
Supermarkets develop their clothing ranges
Figure 51: Press images from Sainsbury’s TU Premium range, autumn 2016
Retailers expand their menswear offer
Made in Britain: Patrick Gant launches not-for-profit label
British-made jeans
Zara launches sustainable clothing collection
Figure 52: Garments from Zara’s sustainable Join Life collection, autumn/winter 2016
ASOS and New Look introduce one-hour delivery slots
Jigsaw debuts at London Fashion Week
Selfridges launches Body Studio
Figure 53: Selfridges’ new Body Studio department, April 2016
Figure 54: Interactive mirrors by Oak Labs, 2015
Mr Porter creates shoppable video content for Apple TV
Long Tall Sally creates mannequin based on 3D scan of a customer
ADVERTISING AND MARKETING ACTIVITY 
Declining advertising spend at the supermarkets
Figure 55: Total above-the-line, online display and direct mail advertising expenditure on clothing, top 30 spenders, 2012-16
Boohoo and Burberry utilise digital channels
Amazon Fashion launches first television advert
H&M retains high-profile campaign with David Beckham
Press advertising accounts for almost half of spend
Figure 56: Total above-the-line, online display and direct mail advertising expenditure on clothing, by media type, 2015
Nielsen Ad Intel coverage
BRAND RESEARCH 
What you need to know
Brand map
Figure 57: Attitudes towards and usage of selected brands, January-August 2016
Key brand metrics
Figure 58: Key metrics for selected brands, January-August 2016
Brand attitudes: ASOS and Very provide a great online service
Figure 59: Attitudes, by brand, January-August 2016
Brand personality: Ted Baker and Jigsaw earn an image of exclusivity
Figure 60: Brand personality – Macro image, January-August 2016
Boohoo and Missguided benefit from cutting-edge image
Figure 61: Brand personality – Micro image, January-August 2016
Brand analysis
Mid-market retailers: M&S, Next and Gap
Young and premium fashion retailers: Zara, Superdry, Ted Baker and Jigsaw
Online-only fashion retailers: ASOS, Boohoo, Missguided and Very
Value retailers: Primark and TK Maxx
ASDA GROUP LTD
What we think
In a spin
Clothing
Project Renewal
The need for online growth
ToYou could provide increased store footfall
Background
Company performance
Figure 62: Asda Group Ltd: Group financial performance, 2010/11-2014/15
Figure 63: Asda Group Ltd: Outlet data, 2010/11-2014/15
Retail offering
ARCADIA GROUP
What we think
Total sales grow but like-for-likes are down
Topshop/Topman drives the business
Other brands less profitable
Scope for rationalisation
Burton: could do better
Company background
Company performance
Figure 64: Arcadia Group: Group financial performance, 2010/11-2014/15
Figure 65: Arcadia Group: Outlet data, 2010/11-2014/15
Retail offering
DEBENHAMS
What we think
More relevant marketing
More exciting and exclusive new Designers at Debenhams launches
Children’s clothing
New fashion concession partners
Improved multichannel fashion experience
New chief executive brings a wealth of fashion experience
Company background
Company performance
Figure 66: Debenhams: Group financial performance, 2010/11-2014/15
Figure 67: Debenhams: Outlet data, 2010/11-2014/15
Retail offering
THE EDINBURGH WOOLLEN MILL GROUP
Background
Company performance
Figure 68: The Edinburgh Woollen Mill Group: Group financial performance, 2010/11-2014/15
Figure 69: The Edinburgh Woollen Mill Group: Outlet data, 2010/11-2014/15
Retail offering
GRUPO INDITEX
What we think
Inditex outperforms the market
Integrating the digital and physical experience
Zara adopts a more sustainable approach to fast fashion
Company background
Company performance
Figure 70: Grupo Inditex: Group financial performance, 2011/12-2015/16
Figure 71: Grupo Inditex: Share of sales, by retail brand, 2015/16
Figure 72: Grupo Inditex: Sales and operating profit, by major retail brand, 2011/12-2015/16
Figure 73: Grupo Inditex: Outlet data, by region, at January 2016
Figure 74: Grupo Inditex: Store numbers, by retail brand, at January 2016
Figure 75: Grupo Inditex: Outlet data, 2011/12-2015/16
Retail offering
H&M HENNES & MAURITZ
What we think
Designer collaborations boost sales and strengthen fashion credentials
Rapid store growth
E-commerce expansion
A one-stop shop for fashion and beauty
Sustainable fashion initiatives
Company background
Company performance
Figure 76: H&M Hennes & Mauritz: Group financial performance, 2010/11-2014/15
Figure 77: H&M Hennes & Mauritz: Outlet data, 2010/11-2014/15
Retail offering
HOUSE OF FRASER PLC
What we think
Capitalising on House Brand and womenswear sales growth
Online fashion shopping proposition
Perfect fit
Store refurbs attracting new fashion brands
Embracing multicultural fashion
Company background
Company performance
Figure 78: House of Fraser Plc: Group financial performance, 2011/12-2015/16
Figure 79: House of Fraser Plc: Outlet data, 2011/12-2015/16
Retail offering
JOHN LEWIS
What we think
A strong performance
An area of focus
Innovation drives growth
Online
Company background
Company performance
Figure 80: John Lewis Partnership: Group financial performance, 2011/12-2015/16
Figure 81: John Lewis Partnership: Outlet data, 2011/12-2015/16
Retail offering
MATALAN 
What we think
Liverpool warehouse problems resolved
New web platform to push online growth
New shop-in-shop concept
Bolstering fashion credentials
Fresh store layouts for a more enjoyable shopping experience
Company background
Company performance
Figure 82: Missouri TopCo Ltd/Matalan: Group financial performance, 2011/12-2015/16
Figure 83: Matalan Ltd: Outlet data, 2011/12-2015/16
Retail offering
MARKS & SPENCER
What we think
Clothing: still the main problem for M&S
Womenswear remains the focus
Streamlining the brand portfolio
Availability and in-store experience must improve
Back to basics
Menswear looks promising
Online sales must improve
The road ahead
Company background
Company performance
Figure 84: Marks & Spencer: Group financial performance, 2011/12-2015/16
Figure 85: Marks & Spencer: Outlet data, 2011/12-2015/16
Retail offering
NEW LOOK GROUP PLC
What we think
Menswear push
Cosmetics and fragrances and homewares
Web enhancements and wider delivery options drive own online sales
Capitalising on third-party e-commerce partners’ local knowledge and expertise
New concept stores delivering sales and profit growth
China expansion gathering pace
Company background
Company performance
Figure 86: New Look Group Plc: Group financial performance, 2011/12-2015/16
Figure 87: New Look Group Plc: Outlet data, 2011/12-2015/16
Retail offering
NEXT
What we think
A solid performer
E-commerce late to mobile
Becoming more agile
Store network facilitates click-and-collect
One brand, multiple channels?
Company background
Company performance
Figure 88: Next plc: Group financial performance, 2011/12-2015/16
Figure 89: Next plc: Outlet data, 2011/12-2015/16
Retail offering
PRIMARK/PENNEYS
What we think
The most popular clothing retailer
Inevitable slowing of growth
Facing a triple threat
Lack of transactional website is hurting it
Devaluation of pound set to hit margins
Company background
Company performance
Figure 90: Primark/Penneys: Group financial performance, 2011/12-2015/16
Figure 91: Primark/Penneys: Outlet data, 2011/12-2015/16
Retail offering
RIVER ISLAND CLOTHING CO LTD
What we think
Catering to plus-sized customers
Making it easier for its customers to buy online
Menswear push
New kids’ collection to capitalise on the growing UK children’s clothing market
Tapping into the athleisure trend
New delivery option for customers unable to collect their orders
Using digital technology to drive footfall to stores
New channels to shop River Island
Company background
Company performance
Figure 92: River Island Clothing Co Ltd: Group financial performance, 2010/11-2014/15
Figure 93: River Island Clothing Co Ltd: Outlet data, 2010/11-2014/15
Retail offering
TESCO PLC
What we think
On the road to recovery
Clothing sales tracking UK sales
Streamlining online ordering
In-store concessions: no decision yet
Exposed to performance of larger Tesco stores
International expansion for F&F brand
Company background
Company performance
Figure 94: Tesco Plc: Group financial performance, 2011/12-2015/16
Figure 95: Tesco Plc: Outlet data, 2011/12-2015/16
Retail offering
TJX UK (TK MAXX)
What we think
TK Maxx benefits from younger men’s penchant for designer brands
Scope for catching up in the online space
Company background
Company performance
Figure 96: TJX UK (TK Maxx): Group financial performance, 2011/12-2015/16
Figure 97: TJX UK (TK Maxx): Outlet data, 2011/12-2015/16
Retail offering
THE CONSUMER – WHAT YOU NEED TO KNOW
Increase in male shoppers
M&S sees declining female shoppers
Young men buy clothes most often
Half of women treat themselves to clothes
Moving away from discounting
Growing interest in Made in Britain clothes
End to seasonal clothes
WHAT FASHION ITEMS PEOPLE BUY
Outerwear dominates
Figure 98: Spending habits on clothes, footwear and accessories, September 2016
RETAIL CUSTOMER PROFILE COMPARISON
Increase in male shoppers
Figure 99: Customer profile, by gender, July 2016
Rise in 35-44s shopping for clothes
Figure 100: Customer profile, by age, July 2016
Figure 101: Customer profile, by socio-economic group, July 2016
WHERE PEOPLE SHOP FOR CLOTHES
M&S sees declining female shoppers
Figure 102: Retailers from which clothes are bought both in-store and online, July 2016
Amazon is fifth most popular for fashion
Figure 103: Retailers from which clothes are bought split by in-store and online, July 2016
Supermarkets grow in popularity for clothing
Young men are shopping more at young fashion retailers
Who is driving growth?
Figure 104: 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, July 2016
Repertoire analysis
Figure 105: Repertoire of retailers from which clothes are bought in-store or online, July 2016
FREQUENCY OF BUYING CLOTHES
Figure 106: How often consumers have bought clothes in the last 12 months, July 2016
Young men buy clothes most often
Figure 107: Consumers who have bought clothes once a month or more often in the last 12 months, by gender and age, July 2016
Women aged 25-44 shop less frequently, but will pay for quality
Affluent buy clothes more frequently
Figure 108: Consumers who have bought clothes once a month or more often or once every 2-3 months or less in the last 12 months, by how they describe their financial situation, July 2016
REASONS FOR BUYING CLOTHES
Half of women treat themselves to clothes
Retailers combine leisure and retail
Figure 109: Reasons consumers have bought clothes for themselves in the last 12 months, July 2016
Moving away from discounting
Figure 110: Consumers who have bought clothes for themselves in the last 12 months to take advantage of a sale/special offer, by gender and age, July 2016
ATTITUDES TOWARDS BUYING CLOTHES
Growing interest in Made in Britain clothes
Figure 111: Agreement with attitudes towards buying clothes, July 2016
Young men focus on design
Figure 112: Agreement with statement ‘I prefer designs that stand out’, by gender and age compared with average, July 2016
Young women drawn to low prices
ATTITUDES TOWARDS SHOPPING FOR CLOTHES
End to seasonal clothes
Figure 113: Agreement with attitudes towards shopping for clothes, July 2016
Older women drawn to in-store displays
Young men want to see stock availability online
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Data Sources
Definitions
VAT
Sales per store, sales per sq m
Other
Abbreviations
Consumer research methodology
APPENDIX – MARKET SIZE AND FORECAST
Forecast methodology

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