Verdict sample pages

Value Clothing Retail in the UK page 2

Spend rises by £2.5bn in five years to 2014, with 34.4% coming from

Primark

Figure 1: Value clothing market drivers (£bn), 2014e on 2009

Source: Verdict V E R D I C T

Note: Other includes the likes of TJ Hughes, Ethel Austin and The Officers Club, as

well as smaller independents and online players.

The top four contributors of growth steal share from midmarket players

M&S and Arcadia

Collectively, Primark, Sainsbury's, TK Maxx and H&M will contribute to almost 75.0% of the

£2.5bn growth in value clothing expenditure in the five years to 2014, driven by growing their

store presence in the UK and focusing on broadening clothing ranges to target a wider

audience. Primark and H&M have invested in transeasonal ranges to cope with unpredictable

weather, and have ensured that stores are regularly updated with newness to satisfy the needs

and demands of their fast fashion shopper.

Sainsbury's strong focus on quality and value has allowed it to entice M&S's and Bhs's

midmarket family shoppers, who value the convenience of shopping across all sectors in one

store – causing M&S and Bhs to suffer as a result. With more competition at the bottom end of

its price architecture, M&S has adapted its brand positioning by introducing more fashion-led

ranges and extending its price architecture upwards. While inflation will have contributed to

price increases, entry price points for its basic products such as a white vest top and jeans have

both increased, by £1.00 and £2.50 in the last two years to £6.00 and £15.00, respectively.

Moreover, the midmarket player has grown its range of quality tailoring, pure silk and cashmere

collections to showcase its quality and design credentials – separating it from the value

specialists.

Verdict sample pages

Value Clothing Retail in the UK page 3

Value retailers must satisfy a very broad customer base

Figure 2: Value clothing shopper profile (%), 2014

39.0 61.0 17.9 19.5 18.3 18.2 13.9 12.3 19.2 29.0 23.3 28.5

Male Female 16-24 25-34 35-44 45-54 55-64 65+ AB C1 C2 DE

%

Source: Verdict V E R D I C T

Note: based on Verdict's How Britain Shops consumer data gathered in October 2013.

Data based on clothing visitors at the following retailers: Asda, Aldi, Peacocks, Bonmarché,

Tesco, Sainsbury's, TJ Hughes, boohoo, Lidl, Primark, TK Maxx, Matalan, New Look, H&M

and Forever 21.

Gone are the days when the likes of Primark, Peacocks, the grocers and Matalan were

mainly targeted at C2 and DE consumers, with large ranges of basics, little fashion and a

focus on the whole family, satisfying the needs of consumers with smaller disposable

incomes to spend on discretionary clothing. In the last nine years we have seen a shift in

socioeconomic penetration, with the visitor share for value clothing retailers in 2005 skewed

more towards the C2 and DEs, making up 55.7% of all visitors compared to 51.8% in 2014,

while the 16–24 age group represented 17.1% – 0.8 percentage points lower than in 2014

with improved fashionability driving the appeal of these retailers among younger shoppers.

3.8 million more clothing shoppers visit value retailers than in 2009

The shift in the customer base and consumer willingness to buy across the value segment

as well as the mid and premium markets means that value retailers now have a far more

varied shopper base to satisfy. In 2014 there will be an additional 3.8 million clothing

shoppers visiting value clothing retailers compared to 2009, highlighting how their appeal

has become much broader.

Verdict sample pages

Value Clothing Retail in the UK page 4

Value clothing retailers must showcase breadth of non-core sectors

Potential for players to grow sales through investing in complementary

product areas

Sales growth opportunities in the UK value clothing market are getting harder to come by,

with well-established players now required to steal share to grow rather than being able to

do it organically. Many clothing retailers are battling this by launching and growing ranges

of non-core product areas – growing destination appeal in new sectors and encouraging

existing customers to cross-sector browse and make impulse purchases. While we

recognise that retailers cannot be all things to all consumers, where appropriate, value

clothing players should enhance their offers across sectors such as homewares, beauty

and sports to differentiate themselves from rivals and drive loyalty.

Figure 3: Growth areas for value retailers, 2014

Source: H&M, TK Maxx, Verdict V E R D I C T

Investing in sectors such as home, sports and beauty can significantly contribute to sales

growth due to pent up consumer demand within these areas and market growth

opportunities. These non-core sectors will also drive new footfall into stores and prevent

Verdict sample pages

Value Clothing Retail in the UK page 5

shoppers from turning to rivals – protecting market share and limiting customer

dissatisfaction. Though introducing smaller sectors such as entertainment and food will

have little impact on overall sales and the value retailer is unlikely to become a destination

for these sectors, they should be used to utilise difficult selling space instore and drive

impulse purchases.

To find out more about the value clothing retailing opportunities in the Clothing & Footwear

sector please contact enquiries@verdictretail.com

The full report is available to purchase in our store.

Other products related to Clothing & Footwear retailing in the UK:

WOMENSWEAR RETAILING IN THE UK | VERDICT MARKET REPORT

ONLINE PUREPLAYS IN UK CLOTHING & FOOTWEAR

UK CUSTOMER SATISFACTION INDEX 2014 CLOTHING | VERDICT CONSUMER REPORT

UK CUSTOMER SATISFACTION INDEX 2014 FOOTWEAR| VERDICT CONSUMER REPORT