Size of uk fashion industry



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Introduction

The UK fashion industry is becoming more competitive as the effects of recession are fading away after giving the consumers lessons on spending habits. This essay will summarize the issues surrounding the e-commerce, which is fast becoming a key driver for growth. It will look at the size of UK fashion industry; structure of fashion market; garment type sold; retail formats; top 5 UK fashion brands by market share and major competitors. In exploring these factors, the essay will identify the emerging trends in the factors and the effects of those trends to the industry. Moreover, the essay will explore the changes that are being noticed by how the industry players are shifting from offshore production to local production due to raising shipping costs and longer lead-time. Another factor shaping the UK fashion industry is the online vibe, where shoppers are increasingly turning to internet due to high broadband penetration and increased smartphone ownership among shoppers. However, the essay will not explore this factor in detail but will explore how the factor influence the factors identified earlier.



Size of UK fashion industry

UK fashion industry is represented by clothing, footwear and accessories. The industry is estimated to be £43.1 billion by sales volume according to UK Department for Culture, Media and Sport, a figure that is higher compared to Mintel forecast of £42billion. The industry could be divided into two categories: top end for the few and mass market for many. The top end for few has levels like Couture, Demi-couture, Designer rtw, Bridge brands, and Diffusion rtw. The mass market for many has levels like upper high street, mainstream high street and value. The mass market for many have a larger consumer base hence a larger number of outlets compared to the top end level for the few. However, in terms of cost, the top end charges a larger price for the clothing products compared to the mass market. The industry can also be divided according to the products that it traded. Using this method, we have categories like womensware, mensware, childrensware, and accessories. When this categorization is used, womenswear dominate the fashion industry market with a market share of 55.1%, followed by menswear with a market share of 25.4%, the other categories share the remaining percentage as indicated in figure 1 below. However, in terms of average growth rate, the accessories category has the highest percentage of 76.7% while all the other categories have an average growth rate of less than 40%. This indicates that the accessories category might overtake the other categories of the industry in future in terms of the market share.



Figure 1 Fashion market share (Monk, 2012)



Structure of fashion target market

The fashion market is divided into luxury (premium), midmarket and value retailers. Verdict research forecasts indicate that value retailers to experience a growth rate of +2.3% from 26.5% in 2008 up to 28.8% in 2016. Midmarket retailers are expected to lose by -6.1% for same duration moving from a high of 57.3% to low of 51.2%. Luxury (premium) retailers are expected to have the highest gain in market share of +3.8 thereby expanding from 16.2% in 2008 to 20.0% by 2016. This is informed by macro factors trend such as disposable income by middleclass customers who have been heat by inflation due to increased retailed prices (Curtis 2012). The midmarket retailers are faced with raising wage bill while luxury retailers are making impressive gains due to utilization of e-commerce (Read, Chace, & Rowe 2012). Since women are very responsive to fashion, the lesser the time to deliver the fashion garment seen from a catwalk to their homes will make them spend more.



Women customers are ready to spend more money on fashion that men once their bills are catered for at 57% as compared to men at a partially 35% (mintel 2012). Young women have been cushioned from recession due to delayed shift to independent living, hence protecting them from any effects of economic hardship. When age is put in to the picture, shoppers over 55+ years are increasingly purchasing high classic clothing that are comfortable and last longer (Clifford 2012). This indicates that the increase in value retailers and luxury (premium) retailers and the decrease in midmarket retailers is likely to affect womensware category of the industry more than the menswear and childrenswear categories. Moreover, it might result to a significant change in the accessories categories since women are known to be the key players in this category.



Figure 2 UK consumer spending (Centre for Retail Research)

Any serious fashion retailer would produce newer designs targeted to this profile of customers, who despite economic recession are quick to spend money on new fashion. As a result, fashions targeted to younger women might be produced in larger numbers compared to fashions targeted to older women, men and children. This would comprise both clothing and accessories due to perceived demand.

Market Division in terms of Garment type sold

The women outerwear have continued to dominate the fashion market turning to internet due to high broadband penetration and increased smartphone ownership among women. Women’s outerwear comprises 49% of the entire market while men’s outwear trail with 25%, childrenswear forming 13%, nightwear at 1 %, accessories at 5% and men’s and women’s underwear at only 7%. (Sender, 2012). For instance, women red herring coat cost between £40 and £50 after discount at Bebenhams retail store (Debenhams 2013). At Marks and Spencer a Céline-esque coat cost £85 after discounts (Telegraph 2012). This trend is expected to continue since women, especially the younger ones, are more cushioned to economic factors like inflation as compared to men.


Fashion Retail market formats Operating in the UK

The retail market for fashion industry is highly dynamic and comprises major formats such as specialists, department stores, value retailer, off-price retailer, lifestyle store, franchise, factory outlet centres. The number of physical retail shops is expected to experience a drop from 281,930 to 220,000 by 2018 owing to the increased uptake of online shopping using mobile applications (Monk 2102). Specialists (multiples and independents), Department stores, Value Retailer (Every Day Low Prices – ie Primark), ¸ Off-price Retailer (discounts on brands / WIGIG ie TK Maxx), Lifestyle store (product choice / niche target ie Anthropologie / Urban Outfitters) Franchise (a shop operated by a person or a group under the name of another group, having paid a royalty / fee) Factory Outlet Centres (ie Bicester Village). Each of this category has a specific share of the market.



Top 5 UK fashion brands by market share

UK fashion market has several players each with a certain percentage of market. The market leader is Marks & Spencer with 11.6% market share. However, they are experiencing a lot of issues hence they market share might drop significantly in the near future. The market competitor is Arcadia/BHS with 8.1% market share. This fashion brand is experiencing very little issues when compared to Marks & Spencer and is expected to maintain or increase its market share in the near future. Other key brands in the UK fashion industry are Next with a 6.9% market share, Primark with 6.2% market share, and New Look with 3.5% market share.

Due to emergence and growth of e-commerce, new fashion brands are not expected to emerge. However, the existing fashion brands are expected to grow depending on how fast they will be able to adapt and use e-commerce, especially e-marketing. The brand that would be quick to adapt e-commerce might end up being the market leader regardless of its current position in the market. Other factors that might change the fashion market in terms of the market share of individual brands are product differentiation and market focusing. Brands that are focused to younger women have a larger growth prospects than other brands. As a result, market players focusing on these brands have a higher chance of growth compared to market players focusing on other brands. This might result to a change in the top five market leaders in the near future. Mark & Spencer might be eliminated from the list of top five brands because of the issues that it is currently experiencing.

Major competitors

In terms of organizations, UK fashion industry has several players that compete among themselves. Most of the organizations in this industry deal with several brands that are positioned in different market segments. The major competitors in this industry are Asda, Debenhams, TKMaxx, Matalan, H&M, and Tesco. Asda has the largest competitive advantage with 3.2% market share. Asda is followed by Debenhams with 2.9% market share, which is followed closely by TKMaxx with 2.8% market share. TKMaxx is then followed by Matalan, H&M and Tesco with 2.7%, 2.5%, and 2.1% market share respectively. Each of these industry players plays a very significant role in terms of determination and control of prices and quality. Each of them also plays a very significant role in shaping the practice and strategies applied in the industry in terms of operations especially in marketing and commerce. All of them have adapted e-commerce to enhance their competitiveness. This is what has helped them to maintain their competitive position despite the changing trends in the UK fashion industry.



References

Books

Curtis, T. (2012). CIM Coursebook 06/07 Marketing in Practice. Routledge.

Read, T., Chace, C., & Rowe, S. (2012). The Internet Consumer Bible. Random House.

Internet

Debenhams (2013). Red Hering. Available from www.debenhams.com/women/red-herring ‎ (Accessed 2 December 2013)

Monk, H. (2012) Clothing Retailing. Web. Mintel. Available from: http://academic.mintel.com/display/590374/ (Accessed 2 December 2013)



Retail Forecast for 2013-2015 – Web. Centre for Retail Research, Nottingham UK. Available from http://www.retailresearch.org/retailforecast.php (Accessed 2 December 2013)

Sender, T. (2012) Women, Fashion Lifestyle- Uk. Web. Mintel, available from http://acdemic.mintel.com/display/590148/?highlight=true (Accessed 2 December 2013)



Telegraph (2012). Marks & Spencer: Great if you can find it - Telegraph. (2012). Web.Accessed from http://fashion.telegraph.co.uk/news-features/TMG10057358/Marks-and-Spencer-Great-if-you-can-find-it.html (Accessed 2 December 2013)

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