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Clothing Retailing - UK - October 2009

ISSUES IN THE MARKET
Main themes
Definitions
Abbreviations
FUTURE OPPORTUNITIES
Trading down but what next?
The middle market must fight back
MARKET IN BRIEF
Future
Deflation pervades
Consumer context
Competitive landscape
INTERNAL MARKET ENVIRONMENT
Key points
Clothing takes the biggest hit among those cutting back
Figure 1: The items adults are cutting back on in the recession, February 2009
The price dilemma for retailers
Figure 2: UK clothing price deflation, 2005-Q2 2009
The young – in denial?
Less concerned about their finances
Figure 3: UK: Concern over finances, % point change, Feb 2008-Jun 2009
But have they reached the tipping point?
Figure 4: UK: Concern over job prospects, 18-25s, February 2008-June 2009
Changing allegiances
Figure 5: Selected retailers where the 18-25s buy clothes, May 2008 and July 2009
Competition from non-specialists
Figure 6: Clothing specialists as % of all spending on clothing and footwear, 2001-08
The power of the internet
BROADER MARKET ENVIRONMENT
Key points
Mixed impact of changing demographics
Figure 7: Implications of changing demographics of the UK population for clothing market, 2009-14
Late 2008 – the economy moves into recession
Figure 8: UK: GDP real growth, 1999-Q2 2009
2008 – consumer confidence in freefall…but retail sales robust
Figure 9: Nationwide Consumer Confidence Index, Jan 2006-July 2009
2009 – confidence starts to recover…will retail sales follow?
Figure 10: UK: Retail sales value growth, 2007-09 (August)
Implications for clothes retailing
COMPETITIVE CONTEXT
Key points
Clothing performance held back by deflation
Figure 11: Consumer spending on clothing and other fashion-influenced product markets, 2004-08
Figure 12: Growth in spending on clothing and other fashion-influenced product markets, 2004-08
Spending patterns change in the recession
Figure 13: Growth in spending on clothing and other fashion-influenced product markets, 2007-09
And men cut back more
Figure 14: Clothing spending breakdown, 2004 vs 2008
Consumer prices
Figure 15: Consumer prices on select fashion-influenced categories, 1996-2008
Figure 16: Consumer prices on select fashion-influenced categories, 1996-2008
WHO’S INNOVATING?
The internet – a key battleground for innovation
Brand building
New forms of collaboration
STRENGTHS AND WEAKNESSES IN THE MARKET
Strengths
Weaknesses
SECTOR SIZE AND FORECAST
Key points
Economic and consumer outlook
Retail forecasts
Improving short term outlook for retail
Clothing specialists should maintain retail market share in 2009
Longer term they should outperform all retail
Figure 17: UK: Clothing specialists sales, 2004-14
Past trends
Clothing specialists struggle to hold onto retail market share
Figure 18: UK: Clothing specialists sales, 2004-08
Figure 19: UK: Clothing specialists as % of all retail sales, 1999-2008
CHANNELS OF DISTRIBUTION
Figure 20: UK: Clothing market – channels of distribution, 2006 and 2008
Specialists
Department stores struggle to maintain market share
Grocers catch up with department stores
Home shopping
Others
RETAILER COMPETITOR ANALYSIS
Key points
Leading specialists
Value retailers make significant gains
Young fashion holds up too
But the mid-market has been seriously squeezed
Rebuilding for the future
Figure 21: Leading clothing retailers, 2008/09
Evaluation
Figure 22: Selected UK clothing retailers, evaluation, 2009
Market shares
Figure 23: UK: Leading clothing retailers, market shares, 2008
RETAIL ADVERTISING AND PROMOTION
Key points
Cutting back in the downturn
Figure 24: Main media advertising spend, by leading clothing retailers, 2004/05-2008/09
M&S dominates
Next builds why Matalan contracts
Figure 25: Top three advertisers – spending index, 2004/05-2008/09
Spending by media
Figure 26: Main media advertising spend, by leading clothing retailers, by media, 2008/09
BRAND ELEMENTS
Key points
 BRAND MAP
Figure 27: Attitudes towards and visitation of clothing retail brands, September 2009
 BRAND QUALITIES OF CLOTHING RETAIL BRANDS
Authority and accessibility for M&S, but Next has style
Figure 28: Personalities of various clothing retail brands, September 2009
Figure 29: Personalities of various clothing retail brands, September 2009 (continued)
 EXPERIENCE OF CLOTHING RETAIL BRANDS
Tesco and M&S most commonly visited, TJ Hughes lacks awareness
Figure 30: Consumer visitation of various clothing retail brands, September 2009
 BRAND INTENTIONS FOR CLOTHING RETAIL BRANDS
Bhs and Burton most considered
Figure 31: Consideration of various clothing retail brands, September 2009
 BRAND SATISFACTION FOR CLOTHING RETAIL BRANDS
Fashion specialists have the edge
Figure 32: Satisfaction with various clothing retail brands, September 2009
 BRAND COMMITMENT TO CLOTHING RETAIL BRANDS
Value retailers lack engagement
Figure 33: Commitment to various clothing retail brands, September 2009
Figure 34: Commitment to various clothing retail brands, September 2009 (continued)
 NEXT
What the consumer thinks
Figure 35: Attitudes towards the Next brand, September 2009
 BONMARCHÉ
What the consumer thinks
Figure 36: Attitudes towards the Bonmarché brand, September 2009
 DEBENHAMS
What the consumer thinks
Figure 37: Attitudes towards the Debenhams brand, September 2009
 TOPSHOP/TOPMAN
What the consumer thinks
Figure 38: Attitudes towards the Topshop/Topman brand, September 2009
 TESCO
What the consumer thinks
Figure 39: Attitudes towards the Tesco brand, September 2009
 PRIMARK
What the consumer thinks
Figure 40: Attitudes towards the Primark brand, September 2009
 ZARA
What the consumer thinks
Figure 41: Attitudes towards the Zara brand, September 2009
 ASDA/GEORGE
What the consumer thinks
Figure 42: Attitudes towards the Asda/George brand, September 2009
 MARKS & SPENCER
What the consumer thinks
Figure 43: Attitudes towards the Marks & Spencer brand, September 2009
THE CONSUMER – WHERE THEY BUY CLOTHING
Key points
Where they buy clothing
Figure 44: Where they buy clothes, July 2009
The changing face of the UK high street
Figure 45: Outlets used for purchasing clothing in the last 12 months, 2004-09
Who buys where
Women far more enthusiastic shoppers than men
Figure 46: Where they buy clothes – top 10, by gender, July 2009
Next corners the 25-44-year-old market
Figure 47: Where they bought clothes in the last 12 months – top 10, by select age bands, July 2009
And e-commerce grabs the attention of the young
Figure 48: Internet shoppers, by age, July 2009
M&S dominates the older end of the market
Figure 49: Where they bought clothes in the last 12 months – top 10, by select age bands, July 2009
M&S and department stores well placed to benefit from socio-economic shift
Figure 50: Selected retailers where they buy clothes, by socio-economic group, July 2009
Cross category shopping
Figure 51: Where they bought clothes in last 12 months, by grocery stores used, July 2009
Figure 52: Where they bought clothes in last 12 months, by grocery stores used, July 2009
THE CONSUMER – THE WAY THEY SHOP FOR CLOTHING
Key points
Consumers cutting back
Figure 53: Way in which they shop for clothing compared to previous year, July 2009
Volume versus value – the gender divide
Figure 54: Way in which they shop for clothing compared to previous year, by gender, July 2009
Older consumers stick with same habits
Figure 55: Those with unchanged shopping habits and those shopping around more, by age, July 2009
But the 25-54s trade down most
Figure 56: Those mostly buying on sale etc and those buying more from value retailers, by age, July 2009
Consumers shopping habits by where they’ve shopped
Familiarity and trust
Figure 57: Where they bought clothing, by those buying more from familiar brands/shops they trust, July 2009
Figure 58: Where they bought clothing, by those shopping around more compared to previous year, July 2009
Favouring value retailers
Figure 59: Where they bought clothing, buying more from value retailers compared to previous year, July 2009
Figure 60: Where they bought clothing, by way in which shop for clothing compared to previous year, July 2009
Future intentions
More pessimistic than optimistic overall
Figure 61: Future spending intentions, by gender, July 2009
The optimism of youth or the realism of experience?
Figure 62: Those intending to spend more on clothing in the coming year, by age, July 2009
Figure 63: Future spending intentions, by demographics, July 2009
Other findings
CONSUMER TYPOLOGIES
Key points
Figure 64: Clothing consumer typologies, July 2009
Group 1: Unchanged (62%)
Group 2: Fickle (16%)
Group 3: Price Led (13%)
Group 4: Familiar & Trusted (9%)
Where people shop by typology
Figure 65: Where they bought clothing, by consumer typology, July 2009
ALEXON GROUP
Figure 66: Alexon Group Plc: Sales as share of clothing retailers’ sales in UK, 2004-08
Recent history
Financial performance
Figure 67: Alexon Group Plc: Group financial performance, 2004/05-2008/09
Store portfolio
Figure 68: Alexon Group Plc: Outlet data, 2005-09
Retail offering
Market positioning
Brands
Figure 69: Alexon Group: List of brands, 2008/09
e-commerce and home shopping
ARCADIA GROUP
Figure 70: Arcadia Group Brands Ltd: Sales as share of clothing specialists in the UK, 2004-08
Strategic evaluation
Recent history
Financial performance
Figure 71: Arcadia Group: Group financial performance, 2003/04-2007/08
Store portfolio
Figure 72: Arcadia Group Brands Ltd: Outlet data, 2004-08
Figure 73: Arcadia Group: Breakdown of international outlets, September 2009
Figure 74: Arcadia Group: Breakdown of European outlets, by fascia, September 2009
Retail offering
Topshop
Market positioning
Brands/product offer
Pricing
Topman
Market positioning
Brands/product offer
Pricing
Dorothy Perkins
Market positioning
Brands/product offer
Pricing
Burton
Market positioning
Brands/product offer
Pricing
Miss Selfridge
Market positioning
Brands/product offer
Pricing
Evans
Market positioning
Brands/product offer
Pricing
Wallis
Market positioning
Brands/product offer
Pricing
e-commerce and home shopping
Figure 75: Arcadia Group: Websites, 2009
AURORA FASHIONS (FORMERLY MOSAIC FASHIONS)
Figure 76: Aurora Fashions Ltd: Sales as share of clothing specialists’ sales in Europe, 2004-08
Strategic evaluation
Recent history
Financial performance
Figure 77: Mosaic Fashions: Group financial performance, 2004/05-2008/09
Store portfolio
Figure 78: Mosaic Fashions: Outlet data, 2004-09
Figure 79: Mosaic Fashions: Outlets by country, August 2009
Retail offering
Coast
Market positioning
Brands/Product offer
Pricing
Karen Millen
Market positioning
Brands/Product offer
Pricing
Oasis
Market positioning
Brands/Product offer
Figure 80: Oasis: brands, 2009
Pricing
Warehouse
Market positioning
Brands/Product offer
Pricing
e-commerce and home shopping
BENETTON GROUP
Figure 81: Benetton (UK): Estimated retail sales as share of clothing specialists in the UK, 2004-08
Strategic evaluation
Recent history
Figure 82: Benetton Group: Group financial performance, 2004-08
Figure 83: Benetton UK: Financial performance, 2004-08
Store portfolio
Figure 84: Benetton Group: Outlet data, 2004-08
Retail offering
Market positioning
Product offer
Advertising and marketing
e-commerce and home shopping
BHS
Figure 85: Bhs Plc: Sales as share of clothing specialists’ sales in UK, 2003-07
Strategic evaluation
History
Financial performance
Figure 86: Bhs Plc: Group financial performance, 2003/04-2007/08
Store portfolio
Figure 87: Bhs Plc: Outlet data, 2005-09
Figure 88: Bhs: International franchises, number of outlets, 2003-08
Retail offering
Market positioning
Product offer
Brands
Figure 89: Bhs: Brands, 2009
Pricing
Operational issues
e-commerce and home shopping
GAP
Figure 90: Gap Inc: UK sales as share of clothing specialists’ sales in UK, 2004-08
History
Financial performance
Figure 91: Gap Inc: Group financial performance, 2004/05-08/09
Figure 92: Gap UK: Financial performance, 2004/05-08/09
Store portfolio
Figure 93: Gap Inc: Outlet data, 2005-09
Retail offering
Market positioning
Brands
Figure 94: Gap Inc: Brands, 2008
Product offer/Pricing
e-commerce and home shopping
GRUPO INDITEX UK
Strategic evaluation
Recent history
Financial performance
Figure 95: Grupo Inditex: Group financial performance, 2004/05-2008/09
Figure 96: Grupo Inditex: Estimated sales in key European markets, 2004/05-2008/09
Figure 97: Inditex brands: Sales in the UK, 2006/07-2008/09
Store portfolio
Figure 98: Grupo Inditex: Outlet data, 2005-09
Figure 99: UK: Grupo Inditex: Stores by fascia, 2005-09
Retail offering
Market positioning
Zara
Brands
Product offer
Massimo Dutti
Product offer/pricing
Bershka
Product offer/pricing
e-commerce and home shopping
Figure 100: Grupo Inditex: Company websites, 2009
H&M HENNES & MAURITZ
Figure 101: H&M Hennes & Mauritz: Sales as share of clothing specialists’ sales in the UK, 2004-08
Strategic evaluation
Recent history
Financial performance
Figure 102: H&M Hennes & Mauritz: Group financial performance, 2004-08
Figure 103: H&M Hennes & Mauritz UK Ltd: Financial performance, 2003/04-2007/08
Store portfolio
Figure 104: H&M Hennes & Mauritz: Outlet data, 2004-08
Retail offering
Market positioning
Product offer
Brands
Figure 105: H&M: Own brand portfolio, 2009
Pricing
Operations
COS
Advertising and marketing
Figure 106: H&M Hennes & Mauritz: Breakdown of UK advertising expenditure, 2008/09
e-commerce and home shopping
MACKAYS STORES GROUP
Figure 107: Mackays Stores Group Ltd: Sales as share of clothing specialists’ sales in UK, 2004-08
Recent history
Financial performance
Figure 108: Mackays Stores Group Ltd: Group financial performance, 2004/05-2008/09
Store portfolio
Figure 109: Mackays Stores Group Ltd: Outlet data, 2005-09
Retail offering
Market positioning
Product offer
Pricing
e-commerce and home shopping
MANGO
Figure 110: Mango UK: Sales as share of clothing specialists’ sales in the UK, 2004-08
Strategic evaluation
Recent history
Financial performance
Figure 111: Mango Group: Group financial performance, 2004-08
UK performance
Figure 112: Mango UK Ltd: financial performance, 2004-08
Store portfolio
Figure 113: Mango Group: Outlet data, 2004-08
Retail offering
Market positioning
Brands
Product offer
Pricing
Advertising and marketing
e-commerce and home shopping
MARKS & SPENCER
Figure 114: Marks & Spencer (UK): Sales as share of clothing specialists’ sales in the UK, 2004-08
Strategic evaluation
Recent history
Financial performance
Figure 115: Marks & Spencer (UK): Group financial performance, 2004/05-2008/09
Figure 116: Marks & Spencer (UK): UK sales and like-for-like growth, 2004/05-2008/09
Figure 117: M&S: UK retail sales by product category, 2004/05-2008/09
Store portfolio
Figure 118: M&S: UK and ireland Outlet data, 2005-09
Figure 119: M&S: Outlets not specialising in food, by type, 2008-09
Retail offering
Market positioning
Brands/Product offer
Figure 120: Marks & Spencer: Clothing own brand portfolio, 2009
Pricing
Figure 121: Marks & Spencer: Clothing price architecture, 2004-08
Operational issues
Advertising and marketing
e-commerce and home shopping
Figure 122: M&S: M&S Direct sales, 2006/07-2008/09
MATALAN
Figure 123: Matalan: Sales as share of clothing specialists’ sales in UK, 2004-08
Strategic evaluation
Recent history
Financial performance
Figure 124: Matalan: Group financial performance, 2004/05-2008/09
Store portfolio
Figure 125: Matalan: Outlet data, 2005-09
Retail offering
Market positioning
Brands/product offer
Figure 126: Matalan: Own-brand portfolio, 2009
Pricing
Advertising and marketing
e-commerce and home shopping
MONSOON
Figure 127: Monsoon Plc: Sales as share of clothing specialists’ sales in UK, 2004-08
History
Financial performance
Figure 128: Monsoon Plc: Group financial performance, 2003/04-2007/08
Store portfolio
Figure 129: Monsoon Plc: Outlet data, 2003-08
Retail offering
Market positioning
Brands/Prices
Figure 130: Monsoon Plc: Brand ranges, 2008
Product offer
e-commerce and home shopping
NEW LOOK
Figure 131: New Look Group Plc: Sales as share of clothing specialists’ sales in Europe, 2004-08
Figure 132: New Look Group Plc: Sales as share of clothing specialists’ sales in UK, 2004-08
Strategic evaluation
Recent history
Financial performance
Figure 133: New Look Group Plc: Group financial performance, 2004/05-2008/09
Store portfolio
Figure 134: New Look Group Plc: Outlet data, 2005-09
Figure 135: New Look Group PLC: Outlet data, by country, 2008-09
Retail offering
Market positioning
Brands/Product offer
Figure 136: New Look: Womenswear own brand collections, 2009
Pricing
Operational issues
Advertising and marketing
Figure 137: New Look Breakdown of advertising expenditure in the UK, 2008
e-commerce and home shopping
NEXT GROUP
Figure 138: Next Group: Sales as share of clothing specialists’ sales in the UK, 2004-08
Strategic evaluation
History
Financial performance
Figure 139: Next Group: Group financial performance, 2004/05-2008/09
Store portfolio
Figure 140: Next Group: Next Retail like-for-like sales performance, 2005/06-2008/09
Figure 141: Next Group: Outlet data, 2005-09
Figure 142: Next: International outlets, 2007-09
Retail offering
Market positioning
Brands
Product offer
Pricing
Figure 143: Next: Change in average selling prices, by season, 2006-08
Advertising and marketing
e-commerce and home shopping
PEACOCK GROUP
History
Financial performance
Figure 144: Peacock Group: Group financial performance, 2004/05-2008/09
Store portfolio
Figure 145: Peacock Group: Outlet data, 2005-09
Retail offering
Market positioning
Product offer/brands
Figure 146: Peacocks and bonmarche sub-brands, 2009
Pricing
e-commerce and home shopping
PRIMARK/PENNEYS
Figure 147: Primark: Sales as share of Clothing specialists’ sales in the UK, 2004-08
Strategic evaluation
History
Financial performance
Figure 148: Primark Stores Ltd: Group financial performance, 2004-09
Store portfolio
Figure 149: Primark Stores Ltd: Outlet data, 2004-09
Retail offering
Market positioning
Brands/product offer
Figure 150: Primark: Own brand portfolio, 2008/09
Pricing
Operational issues
Advertising and marketing
e-commerce and home shopping
RIVER ISLAND CLOTHING
Figure 151: River Island Clothing Co Ltd: Sales as share of clothing specialists’ sales in UK, 2004-08
History
Financial performance
Figure 152: River Island Clothing Co Ltd: Group financial performance, 2004-08
Store portfolio
Figure 153: River Island Clothing Co Ltd: Outlet data, 2004-08
Figure 154: River Island Clothing Co Ltd: Breakdown of overseas outlets, by market, 2008
Retail offering
Market positioning
Product offer
Pricing
e-commerce and home shopping
TK MAXX
Figure 155: TK Maxx: Sales as share of clothing specialists’ sales in UK, 2004-08
History
Financial performance
Figure 156: TK Maxx: Group financial performance, 2004/05-2008/09
Store portfolio
Figure 157: TK Maxx: Outlet data, 2005-09
Retail offering
Market positioning
Product offer/brands
Pricing
e-commerce and home shopping
APPENDIX – INTERNAL MARKET ENVIRONMENT
Figure 158: Selected retailers where the 15-24s buy clothes, May 2008 and July 2009
APPENDIX – WHERE THEY BUY CLOTHING
Figure 159: Where they bought clothing in last 12 months, by demographics, July 2009
Figure 160: Where they bought clothing in last 12 months, by demographics, July 2009
Figure 161: Where they bought clothing in last 12 months, by demographics, July 2009
Figure 162: Where they bought clothing in last 12 months, by demographics, July 2009
APPENDIX – THE WAY THEY SHOP FOR CLOTHING
Figure 163: Most popular way in which shop for clothing, compared to previous year, by demographics – All, July 2009
Figure 164: Most popular way in which shop for clothing, compared to previous year, by demographics – All, July 2009
Figure 165: Most popular bought clothing, by way in which shop for clothing compared to previous year – All, July 2009
Figure 166: Most popular bought clothing, by way in which shop for clothing compared to previous year – All, July 2009
Figure 167: Future spending intentions, by demographics, July 2009
Figure 168: Where people bought clothing, by future spending intentions, July 2009
Figure 169: Way in which shop for clothing compared to previous year, by consumer opinion on clothing spend for next year, July 2009
APPENDIX – CONSUMER TYPOLOGIES
Figure 170: Way in which shop for clothing compared to previous year, by consumer typology, July 2009
Figure 171: Consumer typology, by demographics, July 2009
Figure 172: Where people bought clothing, by consumer typology, July 2009
Figure 173: Future spending intentions, by consumer typology, July 2009

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