Clothing Retailing - UK - October 2017

OVERVIEW
What you need to know
Products covered in this report
EXECUTIVE SUMMARY
The market
Clothes sales to grow 3.1% in 2017
Figure 1: Best- and worst-case forecast for consumer spending on clothing and accessories (incl VAT), 2012-22
Clothing specialist sales grow only 2.4%
Figure 2: Clothing specialists’ estimated share of spending on clothing, 2012-17
Companies and brands
Innovative brands continue to outperform
Figure 3: Leading specialist retailers: compound annual growth in revenues, 2012-16
Online clothing market to reach £13.9 billion
Figure 4: estimated market shares of online sales of clothing and footwear, 2015-16
Boohoo has highest level of recommendation
Figure 5: Attitudes towards and usage of selected brands, February, May and August 2017
The consumer
Supermarkets become fashion destination
Figure 6: Retailers from where clothes are bought both in-store and online, July 2017
Most buy every few months or less
Figure 7: How often consumers have bought clothes in the last 12 months, July 2017
Most interest in food and drink areas
Figure 8: Interest in additional services at retailers’ stores, July 2017
Young women want newness
Figure 9: Attitudes to shopping for clothes, July 2017
Over-45s like try-before-you-buy option
Figure 10: Interest in in-store or online innovations, July 2017
What we think
ISSUES AND INSIGHTS
How has the clothing sector performed in 2017 and who is driving sales?
The facts
The implications
Who are the winners and losers in clothing?
The facts
The implications
What are the opportunities for driving sales?
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Rising inflation hits clothing
Consumer confidence dips
Clothes sales to grow 3.1% in 2017
Clothing market will reach £69 billion by 2022
Childrenswear drives growth
Clothing specialist sales grow only 2.4%
MARKET DRIVERS
Rising inflation hits clothing
Figure 11: Consumer prices inflation for garments, Jul 2016-Jul 2017
Figure 12: Consumer prices inflation for garments, 2006-16
Footwear sees higher levels of discounting
Figure 13: Consumer prices inflation for accessories and footwear, Jul 2016-Jul 2017
Inflation versus spending growth
Figure 14: Annual percentage change in spending on clothing (including accessories) versus annual percentage change in consumer prices inflation in clothing, 2013-16
Consumer confidence drops
Figure 15: Trends in consumer sentiment for the coming year, Jan 2016-Aug 2017
Obesity soars among young men
Figure 16: Proportion of overweight and obese population, by gender, 2010-15
Ageing population impacts sector
MARKET SIZE AND FORECAST
Clothes sales to grow 3.1% in 2017
Figure 17: Best- and worst-case forecast for consumer spending on clothing and accessories (incl VAT), 2012-22
The future
Figure 18: Consumer spending on clothing and accessories (incl VAT) at current prices, 2012-22
Consumers continue to spend on clothes
Figure 19: Spending on clothing and accessories as percentage of all consumer spending, 2012-17
Childrenswear drives growth
Figure 20: Estimated distribution of spending on clothing, by sub-category, 2017 (est)
Forecast methodology
SECTOR SIZE AND FORECAST
Clothing specialist sales grow only 2.4%
Figure 21: Best- and worst-case forecast of clothing specialists’ sector sales (incl. VAT), 2012-22
Figure 22: Clothing specialist sales (incl VAT), 2012-22
Specialists’ sales of clothing
Figure 23: Estimated sales of clothing by clothing specialist retailers (incl VAT), 2012-17
Specialist sales of clothing spend declines
Figure 24: Clothing specialists’ estimated share of spending on clothing, 2012-17
KEY PLAYERS – WHAT YOU NEED TO KNOW
Next still in the lead despite declines
Innovative brands continue to outperform
Half of the top players are non-specialists
Online clothing market to reach £13.9 billion
Clothing retailers turn to visual search apps
Boohoo has highest level of recommendation
LEADING SPECIALIST RETAILERS
Next still in the lead despite declines
Figure 25: Leading specialist retailers, net revenues. 2012-16
Innovative brands continue to outperform
Figure 26: Leading specialist retailers: compound annual growth in revenues, 2012-16
Outlet numbers and sales per outlet
Figure 27: Leading specialist retailers: outlet numbers, 2012-16
Sales per outlet
Figure 28: Leading specialist retailers: annual sales per outlet, 2012-16
Sales area and sales densities
Figure 29: Leading specialist retailers: total sales area, 2012-16
Figure 30: Leading specialist retailers: annual sales per sq m, 2012-16
Operating profits and margins
Figure 31: Leading specialist retailers: operating profits, 2012-16
Figure 32: Leading specialist retailers: operating margins, 2012-16
MARKET SHARES
Half of the top players are non-specialists
Figure 33: Leading retailers’ share of spending on clothing and footwear, 2014-16
Department stores lose share
M&S clothing share continues to drop
Figure 34: M&S’s share of spending on clothing and footwear, 2009-16
LEADING NON-SPECIALIST RETAILERS
Online-only retailers see strongest growth
JD Sports outperforms Sports Direct
Figure 35: Leading non-specialist retailers: net clothing and footwear revenues, 2014-16
CHANNELS OF DISTRIBUTION
Pureplays gain share
Figure 36: Estimated distribution of consumer spending on clothing by type of retailer, 2016 and 2017
Grocers grow focus on clothing
Figure 37: Estimated distribution of consumer spending on clothing by type of retailer, 2015- 2017
Specialists lose share further
Figure 38: Clothing specialists’ estimated share of spending on clothing, 2012-17
SPACE ALLOCATION SUMMARY
Men’s, women’s and children’s wear overview
Figure 39: Men’s, women’s and children’s wear overview, October 2017
Detailed category space allocation
Figure 40: Specialist and non-specialist clothing retailers, estimated detailed space allocation by category, October 2017
Figure 41: Specialist and non-specialist clothing retailers, estimated detailed space allocation by category, October 2017
Figure 42: Specialist and non-specialist clothing retailers, estimated detailed space allocation by category, October 2017
Clothing versus non-clothing space
Figure 43: Specialist and non-specialist clothing retailers, estimated clothing versus non-clothing space, October 2017
RETAIL PRODUCT MIX
Figure 44: Leading clothing retailers, estimated sales by product, 2016
Figure 45: Leading clothing retailers:  share of clothing sales by product, 2016
Figure 46: Leading clothing retailers, estimated sales density by product, 2016
Womenswear
Figure 47: Leading clothing retailers, Estimated share of womenswear market, 2016
Menswear
Figure 48: Leading clothing retailers, Estimated share of menswear market, 2016
Childrenswear
Figure 49: Leading clothing retailers, Estimated share of Childrenswear market, 2016
ONLINE
Online clothing and accessories market to reach £13.9 billion
Figure 50: Estimated online sales of clothing and footwear (incl VAT), 2014-17
Online market shares
Figure 51: estimated market shares of online sales of clothing and footwear, 2015-16
Where do people shop online for clothes?
Figure 52: Types of retailers where clothes were bought online in the last 12 months, July 2017
Figure 53: Retailers where clothes were bought online in the last 12 months, July 2017
LAUNCH ACTIVITY AND INNOVATION
Clothing retailers turn to visual search apps
Figure 54: ASOS visual search option, 2017
Gender neutral clothing
John Lewis childrenswear goes genderless
Figure 55: John Lewis gender neutral range, 2017
Unisex adult clothing
Figure 56: LaneFortyFive unisex clothing, 2017
Modest fashion
Figure 57: Nike Pro Hijab, 2017
Personalisation
3D knitwear
Figure 58: Adidas 3D knitwear printing, 2017
Omnichannel approach
Missguided open first physical store
Figure 59: Missguided stores digital displays, 2017
Farfetch store of the future
Figure 60: Phone app for Farfetch ‘store of the future’, 2017
Next to open in-store restaurant
Sustainability
Figure 61: Oasis x ZSL collection, 2017
Try before you buy
Figure 62: The Chapar personal styling service offering try before you buy, 2017
Amazon Prime Wardrobe
Net-a-Porter – You Try, We Wait
ADVERTISING AND MARKETING ACTIVITY
Increased advertising spend by major sports retailers
Figure 63: Total above-the-line, online display, and direct mail advertising expenditure on clothing and accessories, top 30 spenders, 2013-17
M&S Spend It Well
H&M: She’s a lady
Figure 64: Video still from H&M’s she’s a lady campaign, 2016
‘Why would anyone shop at TK Maxx?’
Figure 65: TK Maxx Ridiculous Possibilities campaign, 2017
Press remains top medium for advertising spend
Figure 66: Total above-the-line, online display and direct mail advertising expenditure on clothing, by media type, 2016
Nielsen Ad Intel coverage
BRAND RESEARCH
What you need to know
Brand map
Figure 67: Attitudes towards and usage of selected brands, February, May and August 2017
Key brand metrics
Figure 68: Key metrics for selected brands, February, May and August 2017
Brand attitudes: Supermarkets offer good value
Figure 69: Attitudes, by brand, February, May and August 2017
Brand personality: M&S tired and boring, while Boohoo is fun and vibrant
Figure 70: Brand personality – Macro image, February, May and August 2017
Young fashion brands seen as trendsetting and stylish
Figure 71: Brand personality – Micro image, February, May and August 2017
Brand analysis
Mid-market retailers: M&S, Next, and Mango
Lifestyle retailers: Joules, Fat Face, and Cos
Supermarket retailers: F&F, Tu, George, and Nutmeg
Young fashion retailers: Topshop/Topman, H&M, New Look, Boohoo, and River Island
WHAT FASHION ITEMS PEOPLE BUY
Young men keen clothes shoppers
Figure 72: Spending habits on clothes, footwear and accessories, June 2017
Jeans on trend
Figure 73: Types of outerwear purchased in the last three months, June 2017
RETAIL CUSTOMER PROFILE COMPARISON
Amazon grows female focus
Figure 74: Customer profile, by gender, July 2017
Rise in 25-34s shopping for clothes
Figure 75: Customer profile, by age, July 2017
Figure 76: Customer profile, by socio-economic group, July 2017
WHERE PEOPLE SHOP FOR CLOTHES
Supermarkets become fashion destination
Figure 77: Retailers from where clothes are bought both in-store and online, July 2017
Primark, M&S and Next all see declines
Sports shops lose out to non-specialists
Young women opt to shop at pureplays
Figure 78: Retailers from where clothes are bought split by in-store and online, July 2017
Who is driving growth?
Figure 79: 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 2017
Repertoire analysis
Figure 80: Repertoire of retailers from which clothes are bought in-store or online, July 2017
FREQUENCY OF BUYING CLOTHES
Most buy every few months or less
Figure 81: How often consumers have bought clothes in the last 12 months, July 2017
Young men buy clothes less often
Figure 82: Consumers who have bought clothes once a month or more, by gender and age, July 2017
Affluent buy clothes less often
Figure 83: How often consumers have bought clothes in the last 12 months, by financial situation, July 2017
INTEREST IN ADDITIONAL STORE SERVICES
Most interest in food and drink areas
Figure 84: Interest in additional services at retailers’ stores, July 2017
High demand from under-35s for beauty services
Figure 85: Interest in additional services at retailers’ stores, by gender and age, July 2017
Attracting older women with VIP events
ATTITUDES TO SHOPPING FOR CLOTHES
Young women want newness
Figure 86: Attitudes to shopping for clothes, July 2017
70% of 16-24s want more eco fashion
Women demand more diverse models
Figure 87: Clothing retailing – CHAID – Tree output, August 2017
Methodology
INTEREST IN INNOVATIONS
Over-45s like try before you buy option
Figure 88: Interest in in-store or online innovations, July 2017
Millennials keen on using visual search
Men drawn to subscription boxes
ARCADIA GROUP
What we think
Topshop loses its appeal
Dorothy Perkins falls behind other retailers
Dealing with loss-making brands
Company background
Company performance
Figure 89: Arcadia Group: Group financial performance, 2011/12-2016/17
Figure 90: Arcadia Group: Outlet data, 2012/13-2016/17
Retail offering
ASOS
What we think
Tapping into consumer demand for newness
Exclusivity differentiates the brand and gives consumers more reason to visit
M-commerce fuelling sales growth
Bolstering ethical and environmental credentials
Significantly enhancing its US proposition
Company background
Company performance
Figure 91: ASOS: Group financial performance, 2011/12-2015/16
Retail offering
ASDA GROUP
What we think
A major player in clothing retailing
Looking to become leaner
Toyou service continues to drive footfall into stores
Rumoured B&M deal would give Asda another outlet for clothing
Where now?
Company background
Company performance
Figure 92: Asda Group Ltd: Group financial performance, 2012-16
Figure 93: Asda Group Ltd: Outlet data, 2012-16
Retail offering
DEBENHAMS
What we think
New strategy to lure shoppers back to its stores
Veteran designers could face the axe in own-fashion range shake-up
Extended lingerie offering
‘Mobile first’ strategy driving e-commerce sales
Innovative click-and-collect experience planned to encourage incremental business
Broadening its customer reach through third-party online partners
Company background
Company performance
Figure 94: Debenhams: Group financial performance, 2011/12-2015/16
Figure 95: Debenhams: Outlet data, 2011/12-2015/16
Retail offering
EDINBURGH WOOLLEN MILL 
What we think
Another wave of acquisitions
On the lookout for more
Bringing a new department store to the market
Company background
Company performance
Figure 96: The Edinburgh Woollen Mill Group: Group financial performance, 2011/12-2015/16
Figure 97: The Edinburgh Woollen Mill Group: Outlet data, 2011/12-2015/16
Retail offering
GRUPO INDITEX
What we think
Inditex retains strong position but must continue to innovate
Brand extensions
Figure 98: Stradivarius menswear collection, 2017
Figure 99: Pull&Bear beauty range, 2017
Digital innovations
Company background
Company performance
Figure 100: Grupo Inditex: Group financial performance, 2012/13-2016/17
Figure 101: Grupo Inditex: % share of sales, by retail brand, 2015/16-2016/17
Figure 102: Grupo Inditex: Sales and operating profit, by major retail brand, 2012/13-2016/17
Figure 103: Grupo Inditex: Outlet data, by region, at January 2017
Figure 104: Grupo Inditex: Store numbers, by retail brand, at January 2016 and January 2017
Figure 105: Grupo Inditex: Outlet data, 2012/13-2016/17
Retail offering
H&M HENNES & MAURITZ
What we think
Looking beyond fast fashion
A more seamless shopping experience
New designer collection aims to appeal to fashion conscious male shoppers
New loyalty scheme with exclusive offers and brand experiences
Focusing on offering sustainable finishing processes and eco-friendly materials
Company background
Company performance
Figure 106: H&M Hennes & Mauritz: Group financial performance, 2011/12-2015/16
Figure 107: H&M Hennes & Mauritz: Outlet data, 2011/12-2015/16
Retail offering
HOUSE OF FRASER 
What we think
Refreshing flagging womenswear offering
New fashion concept
Lifestyle-led in-store experiences to drive footfall and extend dwell time
£25 million upgrade of e-commerce platform to double online sales
Company background
Company performance
Figure 108: House of Fraser Plc: Group financial performance, 2012/13-2016/17
Figure 109: House of Fraser Plc: UK & Ireland outlet data, 2012/13-2016/17
Retail offering
JOHN LEWIS 
What we think
A focus on exclusivity
Investment in experience-driven stores
Improved information to streamline the shopping experience
Company background
Company performance
Figure 110: John Lewis Plc (department store): Group financial performance, 2012/13-2016/17
Figure 111: John Lewis Plc (department store): Outlet data, 2012/13-2016/17
Retail offering
MARKS & SPENCER
What we think
Repositioning clothing
Reshaping its stores
Online
Company background
Company performance
Figure 112: Marks & Spencer: Group financial performance, 2012/13-2016/17
Figure 113: Marks & Spencer: Outlet data, 2012/13-2016/17
Retail offering
MATALAN 
What we think
Investment in product quality driving full-price sales
Extensive store refurbishment programme
Exploring international sales growth opportunities
Bespoke fashion and style show enhances online presence
Influencer-generated content boosts fashion credentials
Parcel pick-up service is an opportunity to drive store footfall
Company background
Company performance
Figure 114: Matalan Ltd: Group financial performance, 2012/13-2016/17
Figure 115: Matalan Ltd: Outlet data, 2012/13-2016/17
Retail offering
NEW LOOK 
What we think
Focused on delivering trends to market faster
Fewer discounts and promotions
Multichannel sales potential compromised by slumping website traffic and sales
Expanded menswear proposition
Tailored ranges and domestic sourcing helps boost business in China
Recruiting social media influencers to drive brand awareness and identify trends quicker
Company background
Company performance
Figure 116: New Look Group Plc: Group financial performance, 2012/13-2016/17
Figure 117: New Look Group Plc: Outlet data, 2012/13-2016/17
Retail offering
NEXT GROUP
What we think
Pushing too hard for flexibility?
A bold strategy…
…which could leave it exposed
Giving customers more reason to visit stores
Devaluation impact on prices is diminishing
Where now?
Company background
Company performance
Figure 118: Next Group: Group financial performance, 2012/13-2016/17
Figure 119: Next Group: Outlet data, 2012/13-2016/17
Retail offering
PRIMARK
What we think
Getting the product right
Competition intensifying from rivals
Brexit impact mitigated but price rises a possibility
Should Primark have a transactional website?
Where next?
Company background
Company performance
Figure 120: Primark/Penneys: Group financial performance, 2012/13-2016/17
Figure 121: Primark/Penneys: Outlet data, 2012/13-2016/17
Retail offering
RIVER ISLAND
What we think
Avoiding seasonal fashion marketing
Integrating influencer-generated content
Seamless cross-channel shopping experience
Customer-facing digital enhancements streamline the in-store shopping experience
Improved stock availability boosting store sales
Pushing for a bigger slice of the children’s clothing market
Cutting-edge canine fashion
Preparing to launch its own homewares
Company background
Company performance
Figure 122: River Island Clothing Co Ltd: Group financial performance, 2012-16
Figure 123: River Island Clothing Co Ltd: Outlet data, 2012-16
Retail offering
TESCO
What we think
Leading the pack with online innovations
Making stores work harder
Where next?
Company background
Company performance
Figure 124: Tesco Plc: Group financial performance, 2012/13-2016/17
Figure 125: Tesco Plc: Outlet data, 2012/13-2016/17
Retail offering
TK MAXX UK
What we think
Attracting a broad demographic
Launching Treasure
Online offers an opportunity to accelerate growth
Company background
Company performance
Figure 126: TK Maxx UK: Group sales performance, 2012/13-2016/17
Figure 127: TK Maxx UK: Outlet data, 2012/13-2016/17
Retail offering
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Definitions
VAT
Sales per store, sales per sq m
Other
Abbreviations
Consumer research methodology
APPENDIX – MARKET SIZE AND FORECAST
Forecast methodology