UK Clothing & Footwear

Transcription

1 UK Clothing & Footwear 2001 Market Review Eighth Edition 2001 Edited by Emma Wiggin ISBN X

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3 UK Clothing & Footwear Foreword In today s competitive business environment, knowledge and understanding of your marketplace is essential. With over 25 years experience producing highly respected off-the-shelf publications, Key Note has built a reputation as the number one source of UK market information. Below are just a few of the comments our business partners and clients have made on Key Note s range of reports. The Chartered Institute of Marketing encourages the use of market research as an important part of a systematic approach to marketing. Key Note reports have been available in the Institute s Information and Library Service for many years and have helped our members to build knowledge and understanding of their marketplace and their customers. The Chartered Institute of Marketing We have enjoyed a long-standing relationship with Key Note and have always received an excellent service. Key Note reports are well produced and are always in demand by users of the business library. Having subscribed to Market Assessment reports for a number of years, we continue to be impressed by their quality and breadth of coverage. The British Library Key Note reports cover a wide range of industries and markets they are detailed, well written and easily digestible, with a good use of tables. They allow deadlines to be met by providing a true overview of a particular market and its prospects. NatWest Accurate and relevant market intelligence is the starting point for every campaign we undertake. We use Key Note because they have a report on just about every market sector you can think of, and the information is comprehensive, reliable and accurate. J Walter Thompson Market Assessment reports provide an extremely comprehensive source of information for both account handling and new business research, with excellent, clear graphics. Saatchi & Saatchi Advertising Hugh Bessant Managing Director Key Note Key Note Ltd 2001

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5 UK Clothing & Footwear UK Clothing & Footwear Executive Summary Market Overview Key Note Consumer Research Competitor Analysis Women s, Girls and Infants Clothing Men s and Boys Clothing Sports and Leisure Wear Clothing Accessories Footwear Strengths, Weaknesses, Opportunities and Threats The Future Further Sources Understanding TGI Data Key Note Research The Key Note Range of Reports Key Note Ltd 2001

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7 UK Clothing & Footwear Contents Contents Executive Summary 1 INTRODUCTION...1 PRICE DEFLATION...1 IMPORT PENETRATION...1 CHANGES IN SHOPPING PATTERNS...2 SHRINKAGE IN UK PRODUCTION CAPACITY...2 EXPORTING OPPORTUNITIES...3 PREFERENCE FOR INTERNATIONAL BRANDS...4 MARKET PROSPECTS Market Overview 7 INTRODUCTION...7 Clothing Definitions... 7 Footwear Definitions... 8 Information Sources and Trade Associations... 8 Government Sources... 8 Commercial Sources... 8 British Apparel & Textiles Confederation... 8 Other Trade Associations... 8 INDUSTRY STRUCTURE...9 Table 1.1: Number of VAT-Based Enterprises Engaged in the Manufacture of Clothing and Footwear by Turnover Sizeband (number of enterprises and %), 1998 and Table 1.2: Number of VAT-Based Enterprises Engaged in the Manufacture of Clothing and Footwear by Sector by Turnover Sizeband (number of enterprises and %), Table 1.3: Number of VAT-Based Local Units Engaged in the Manufacture of Clothing by Sector by Employment Sizeband (number of local units), OUTPUT AND EMPLOYMENT...13 Table 1.4: Indices of Industrial Production (index 1995=100), Table 1.5: UK Manufacturers Sales of Clothing by Garment Type ( m and %), Key Note Ltd 2001

8 Contents UK Clothing & Footwear Employment in Manufacturing Table 1.6: Indices of Employment in Manufacturing (index 1995=100), Table 1.7: Number of Employees in the Clothing and Footwear Industries (000), PEST ANALYSIS...16 Political Factors Economic Factors Social Factors Technological Factors THE TOTAL MARKET...18 Table 1.8: The Total UK Clothing and Footwear Market by Value at Current and Constant 1994 Prices ( m at rsp), MARKET SEGMENTATION...19 Table 1.9: The UK Clothing and Footwear Market by Sector by Value at Current Prices ( m at rsp and %), KEY TRENDS...20 Price Deflation Table 1.10: Retail Price Indices for Clothing and Footwear (index 1996=100), Import Penetration Demand for Designer Labels Table 1.11: Main Media Advertising Expenditure by Clothing and Footwear Manufacturers and Retailers ( m), Year to December Demand for Branded Clothing and Footwear Retailing Fragmentation...24 Table 1.12: Leading Multiples Selling Clothing and Footwear (number of outlets), GLOBAL PERSPECTIVE...27 Table 1.13: Imports and Exports of Clothing and Footwear ( m), Table 1.14: Import and Export Ratios for UK Clothing and Footwear (%), Key Note Consumer Research 31 INTRODUCTION...31 BRAND PENETRATION...31 Table 2.1: Penetration of Clothing and Footwear Brands (% of adults), 1999 and Demographic Analysis of Brand Penetration Sports Brands Table 2.2: The Penetration of the Top Three Sports Brands by Sex, Age, Social Grade and Region (% of adults), Designer Brands Key Note Ltd 2001

9 UK Clothing & Footwear Contents Table 2.3: The Penetration of Designer Brands by Age, Sex, Social Grade and Region (% of adults), Other Clothing Brands Table 2.4: Other Clothing Brands by Sex, Age, Social Grade and Region (% of adults), RETAIL OUTLETS FOR CLOTHING AND FOOTWEAR...39 Table 2.5: Retail Outlets Used for Buying Clothing and Footwear (% of adults), Use of Retail Outlets by Age Table 2.6: Use of Retail Outlets by Age (% of adults), Use of Retail Outlets by Social Grade Table 2.7: The Use of Retail Outlets by Social Grade (% of adults), Use of Retail Outlets by Region Table 2.8: The Use of Retail Outlets by Region (% of adults), Competitor Analysis 45 INTRODUCTION...45 GENERAL CLOTHING MANUFACTURERS...45 Table 3.1: Selected Leading UK Clothing Manufacturers by Turnover ( m), 1999/ Alexon Group PLC Coats Viyella PLC Courtaulds Textiles Ltd Dewhirst Group PLC William Baird PLC Other Clothing Manufacturers Burberry Ltd Dawson International PLC Delta Textiles (London) Ltd...50 Levi Strauss Incorporated Martin International Holdings PLC SR Gent PLC Sherwood Group PLC...51 Stirling Group PLC FOOTWEAR MANUFACTURERS...51 Table 3.2: Selected Leading UK Footwear Manufacturers by Turnover ( m), 1999/ C&J Clark Ltd R Griggs Group Ltd Key Note Ltd 2001

10 Contents UK Clothing & Footwear Stylo PLC SPORTS AND LEISURE WEAR MANUFACTURERS...53 Table 3.3: Leading UK Sports and Leisure Wear Manufacturers by Turnover ( m), 1999/ adidas (UK) Ltd Nike (UK) Ltd Pentland Group PLC Reebok International Ltd Women s, Girls and Infants Clothing 57 INTRODUCTION...57 KEY TRENDS...57 Fashion Trends Change in Retailing Patterns Rise of Couture Houses and Designer Brands Demographic Trends MARKET SIZE...58 Table 4.1: The UK Women s, Girls and Infants Clothing Market by Value at Current and Constant 1996 Prices ( m at rsp and %), Table 4.2: Retail Price Indices for Women s and Children s Outer Wear (index 1996=100), Table 4.3: The UK Women s, Girls and Infants Clothing Market by Sector by Value ( m at rsp and %), SUPPLY STRUCTURE...61 UK Production Table 4.4: Womenswear Production in the UK ( m at msp), Overseas Trade Imports Table 4.5: Imports of Women s Clothing by Type of Garment ( m and %), 1994, 1998 and Table 4.6: Leading Origins of Women s Clothing by Type of Garment ( m), Exports Table 4.7: Exports of Women s, Girls and Infants Clothing ( m), 1994, 1998 and Retail Distribution Table 4.8: Place of Purchase of Women s and Children s Clothing by Value (%), 1997 and Table 4.9: Retail Outlets Used to Buy Clothing or Footwear (% of adults), Table 4.10: Leading Specialist Retailers of Women s and Children s Clothing (number of outlets), Key Note Ltd 2001

11 UK Clothing & Footwear Contents Table 4.11: Leading Childrenswear Multiples by Number of Outlets, MAJOR PLAYERS...69 Table 4.12: Selected Leading Womenswear Manufacturers by Turnover ( m), 1999/2000/ Table 4.13: Brands of Clothing Bought by Women (% of women), Figure 4.1: Brands of Clothing Bought by Women (% of women), ADVERTISING AND PROMOTION...74 Table 4.14: Main Media Advertising Expenditure on Women s Fashion Clothing ( 000), Year to December Table 4.15: Main Media Advertising Expenditure on Underwear and Lingerie ( 000), Year to December Table 4.16: Other Main Media Advertising Expenditure on Clothing ( 000), Year to December BUYING BEHAVIOUR...76 Women s Outer Wear Purchasing Table 4.17: Women s Purchases of Outer Wear by Volume in the Last 12 Months (% of women), Table 4.18: Women s Spending on Outer Wear by Value in the Last 12 Months (% of women), The Purchase of Underwear Table 4.19: Women s Purchases of Underwear by Volume in the last 12 Months (% of women), Table 4.20: Women s Spending on Underwear by Value in the Last 12 Months (% of women), The Purchase of Hosiery Table 4.21: Women s Purchases of Hosiery by Age in the Last 12 Months (% of women), 1998 and Other Purchasing by Women FORECASTS 2001 TO Table 4.22: The Forecast UK Women s, Girls and Infants Clothing Market by Value at Current Prices ( m at rsp and %), Men s and Boys Clothing 81 INTRODUCTION...81 KEY TRENDS...81 The Dressing Down Trend Retailing Trends Brand Awareness MARKET SIZE...82 Table 5.1: The UK Men s and Boys Clothing Market by Value at Current and Constant 1996 Prices ( m at rsp and %), Key Note Ltd 2001

12 Contents UK Clothing & Footwear Table 5.2: Retail Price Indices for Men s and Children s Outer Wear (index 1996=100), Table 5.3: The UK Men s and Boys Clothing Market by Sector by Value ( m at rsp and %), SUPPLY STRUCTURE...84 UK Production Table 5.4: Menswear Production in the UK ( m at msp), Imports Table 5.5: Imports of Men s Clothing by Type of Garment ( m), 1994, 1998 and Source of Imports Table 5.6: Leading Origins of Men s Clothing by Type of Garment ( m), Exports Table 5.7: Exports of Men s and Boys Clothing ( m), 1994 and Retail Distribution Table 5.8: Place of Purchase of Men s and Boys Clothing by Value (%), 1997 and Table 5.9: Retail Outlets Used by Men to Buy Clothing or Footwear (% of adults), Table 5.10: Leading Specialist Retailers of Men s Clothing (number of outlets), MAJOR PLAYERS...90 Table 5.11: Selected Leading Menswear Manufacturers by Turnover ( m), 1999/ Table 5.12: Brands of Clothing Bought by Men (% of men), Figure 5.1: Brands of Clothing Bought by Men (% of men), ADVERTISING AND PROMOTION...93 Table 5.13: Main Media Advertising Expenditure on Menswear ( 000), Year to December BUYING BEHAVIOUR...94 Table 5.14: The Purchase of Men s Clothing by Volume in the Last 12 Months (% of men or women), Table 5.15: Spending on Men s Clothing by Value in the Last 12 Months (% of men or women), FORECASTS 2001 TO Table 5.16: The Forecast UK Men s and Boys Clothing Market by Value at Current Prices ( m at rsp and %), Sports and Leisure Wear 99 INTRODUCTION...99 KEY TRENDS...99 Sports Participation Sports Wear as a Fashion...99 Key Note Ltd 2001

13 UK Clothing & Footwear Contents Branded Clothing and Sports Retailers Current Fashions Table 6.1: The UK Sports Clothing Market by Sector by Value ( m and %), Figure 6.1: The UK Sports Clothing Market by Sector by Value (%), MARKET SIZE Table 6.2: The Total UK Sports and Leisure Wear Market by Value at Current and Constant 1996 Prices ( m at rsp and %), Table 6.3: Sports and Leisure Wear in the Total UK Clothing Market by Value ( m at rsp and %), SUPPLY STRUCTURE UK Production Imports Table 6.4: Imports of T-Shirts and Selected Sports Clothing Items ( m), 1994, 1998 and Exports Retail Distribution Table 6.5: Leading Specialist Retailers of Sports Clothing and Footwear (number of outlets), MAJOR PLAYERS Table 6.6: Brands of Clothing or Footwear Purchased (% of adults), 1999 and Table 6.7: Leading UK Sports Wear Manufacturers by Turnover ( m), 1999/ Hi-Tec Sports PLC Umbro International Ltd Other Companies ADVERTISING AND PROMOTION Table 6.8: Main Media Advertising Expenditure on Sports Clothing and Leisure Wear ( 000), Year to December BUYING BEHAVIOUR Table 6.9: The Purchase of Sports Clothing and Swimwear by Volume in the Last 12 Months (% of men or women), Table 6.10: The Purchase of Sports Clothing and Swimwear by Value in the Last 12 Months (% of men or women), FORECASTS 2001 TO Table 6.11: The Forecast UK Sports Clothing Market by Value at Current Prices ( m at rsp and %), Clothing Accessories 115 INTRODUCTION KEY TRENDS MARKET SIZE Key Note Ltd 2001

14 Contents UK Clothing & Footwear Table 7.1: The Total UK Clothing Accessories Market at Current and Constant 1996 Prices ( m at rsp and %), Table 7.2: Total UK Clothng Accessories Market as a Percentage of the Total Clothing Market by Value ( m at rsp and %), Table 7.3: The UK Clothing Accessories Market by Sector by Value ( m at rsp and %), SUPPLY STRUCTURE UK Production Imports Table 7.4: Imports of Clothing Accessories by Value ( m and %), Exports Retail Distribution Table 7.5 Place of Purchase of Accessories by Value (%), 1997 and MAJOR PLAYERS/ADVERTISING AND PROMOTION BUYING BEHAVIOUR Table 7.6: The Purchase of Handbags by Value in the Last 12 Months (% of women), 1993, 1998, 1999 and FORECASTS 2001 TO Table 7.7: The Forecast UK Clothing Accessories Market by Value at Current Prices ( m at rsp and %), Footwear 123 INTRODUCTION KEY TRENDS Branded Footwear Demise of British Shoe Corporation Import Penetration Fashion Trends Sports Footwear Table 8.1: The UK Sports Footwear Market by Sector by Value ( m at rsp and %), Figure 8.1: The UK Sports Footwear Market by Sector by Value (%), MARKET SIZE Table 8.2: The Total UK Footwear Market by Value at Current and Constant 1996 Prices ( m at rsp and %), Table 8.3: The UK Footwear Market in Total Consumer Expenditure by Value at Current Prices ( bn at rsp, m at rsp and %), Table 8.4: The UK Footwear Market by Sector by Value ( m at rsp and %), Table 8.5: Family Expenditure on Footwear by Age of the Head of the Household ( weekly and index all households=100), Key Note Ltd 2001

15 UK Clothing & Footwear Contents SUPPLY STRUCTURE UK Production Imports Table 8.6: Imports of Footwear by Country of Origin ( m and %), 1994, 1998 and Exports Retail Distribution Table 8.7: Place of Purchase of Footwear by Value (%), 1997 and Table 8.8: Retail Distribution of Footwear by Type of Outlet by Value (%), Figure 8.2: Retail Distribution of Footwear by Type of Outlet by Value (%), Table 8.9: Leading Retailers Selling Footwear (number of outlets), MAJOR PLAYERS Table 8.10: Selected Leading Footwear Manufacturers by Turnover ( m), 1999/ Airborne Footwear Ltd The Shoe Studio Group Ltd Other Companies Sports Footwear Brands ADVERTISING AND PROMOTION Table 8.11: Main Media Advertising Expenditure on Footwear ( 000), Year to December BUYING BEHAVIOUR Table 8.12: The Purchase of Footwear by Volume in the Last 12 Months (% of women or men), Table 8.13: Spending on Footwear by Value in the Last 12 Months (% of men or women), FORECASTS 2001 TO Table 8.14: The Forecast UK Footwear Market by Value at Current Prices ( m at rsp and %), Strengths, Weaknesses, Opportunities and Threats 141 STRENGTHS WEAKNESSES OPPORTUNITIES THREATS Key Note Ltd 2001

16 Contents UK Clothing & Footwear 10. The Future 143 MANUFACTURING PROSPECTS RETAILING PROSPECTS Marks & Spencer High Street Retailers MARKET PROSPECTS FORECASTS 2001 TO Table 10.1: The Forecast UK Clothing and Footwear Market by Value at Current Prices ( m at rsp and %), Further Sources 149 Associations Periodicals Directories General Sources Bonnier Information Sources Government Publications Other Sources Understanding TGI Data 159 Number, Profile, Penetration Social Grade Standard Region Key Note Research 161 The Key Note Range of Reports 163 Key Note Ltd 2001

17 EXECUTIVE SUMMARY

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19 UK Clothing & Footwear Executive Summary Executive Summary INTRODUCTION Although a basic requirement for human existence, clothing and footwear accounts for a declining share of consumer spending, both in the UK and other developed economies. In 2000, UK consumers spent 34.15bn on clothing and footwear. Although this makes it a massive market, as a share of all consumer spending it has declined to 5.8% from 6.3% in Products for women and girls constitute the largest market sector in general clothing, but sales of sports clothing are biased towards men and boys. PRICE DEFLATION The key trend in the clothing and footwear market in recent years has been the tendency for retail prices to fall during a period of generally low inflation in the UK. Between 1996 and 2000, the UK s all-items consumer price index rose by 10%, but clothing and footwear prices fell by 7%. Within this average for all clothing and footwear, some items maintained their market value better than others (e.g. sports clothing and accessories), but the largest market sector, women s outer wear, saw prices decline by 16% over 5 years. IMPORT PENETRATION Intense competition in the High Street has contributed to the pricing pressures, but the principal cause has been a further shift to imports at a time when sterling is riding high on currency markets. Rising import penetration has been a major factor in the market for over 50 years, but the late 1990s brought substantial increases. The higher imported share of the market has been driven by price competition, with low-cost labour a major factor. The use of cheap labour in clothing manufacture has always been a factor, but the 1990s saw production for global distribution shifting to even cheaper bases, sometimes involving sub-contracting by countries whose economies have developed beyond the low-cost stage. Overall, the range of countries exporting to the UK is broader than ever, from traditional suppliers such as Hong Kong (for clothing) and Italy (for footwear), to newer bases such as Turkey, Morocco, Romania, Thailand and Indonesia. Key Note Ltd

20 Executive Summary UK Clothing & Footwear CHANGES IN SHOPPING PATTERNS Along with price deflation and rising imports, the late 1990s brought another profound change to this market, in terms of consumer preferences for shopping. Since 1998, there has been a highly publicised decline at Marks & Spencer, which, despite still being the UK s largest clothing retailer, has struggled to retain popularity with the younger generation of shoppers. Although Marks & Spencer has been given most of the media coverage there has, however, been a broader, underlying movement away from the general clothing outlet, selling broad ranges of unbranded (or own label) clothing for the whole family. This movement led to the dramatic decision of C&A, a Dutch-owned group which was formerly one of the top clothing retailers in the UK, to quit the UK entirely in Other traditional general clothing retailers, such as the BhS and Littlewoods chains of department stores, have also had poor results. Even some of the largest fashion multiples have struggled against the combination of falling prices and demand for sports and designer brands. Sears once the UK s largest footwear retailer and a major owner of fashion stores was broken up in the late 1990s, and restructuring is under way at Arcadia Group, the High Street market leader with 2,500 fashion shops (including Top Shop, Burton, Dorothy Perkins and Evans). Some multiple retailers, such as Next and New Look, have managed to grow during a difficult period, but the fact that UK consumers are prepared to spread their shopping across a very wide range of outlets is illustrated in Key Note s survey for this report. Traditional outlets retain their appeal. It is notable in Key Note s research that department stores, which have a long heritage in selling clothing and footwear (particularly branded clothing through in-store concessions), are used by almost three-quarters of adults, which is ten times more than the share gained so far by the Internet. Online shopping will have to make significant strides to reach a position among even the top ten channels. Sports shops, such as the JJB chain, were the main outlets making gains during the 1990s. By the end of the decade, however, the ever-growing forces of grocery superstores were having the significant impact; an increasing proportion of general clothing for the family is now bought through Tesco, Sainsbury or ASDA, rather than through variety stores. SHRINKAGE IN UK PRODUCTION CAPACITY The increase in import penetration has made it impossible for many large-scale UK manufacturers to survive, even where they have set up factories or contracted some work to low-cost labour countries. Profitability has been hit by falling market share for UK factories, and even more so by the recent failure of clothing and footwear prices to keep up with the general level of price inflation in the economy. 2 Key Note Ltd 2001

21 UK Clothing & Footwear Executive Summary The accelerated decline in the late 1990s was punctuated by regular announcements of factories being closed or large redundancies being made across UK clothing manufacturing. The UK s two largest clothing companies, Coats Viyella and Courtaulds Textiles, went through major restructuring. At Courtaulds, more than a dozen UK factories have either been closed or reduced in capacity in recent years, and the company was acquired by Sara Lee Corporation in At Coats Viyella, a world leader in making thread for sewing, many of the UK clothing subsidiaries (or their factories) have been either sold or closed down; production has been refocused on a few core brands such as Jaeger and Viyella. The problems of import penetration and unprofitable pricing have been exacerbated by a change in policy at Marks & Spencer, which until recently sourced over 90% of its St Michael own label the only label sold in the stores from UK factories. This policy change affected most major manufacturers, including Courtaulds Textiles and Coats Viyella. Smaller companies have suffered even more from Marks & Spencer s loss of market share and its sourcing outside the UK, since they relied even more heavily on their Marks & Spencer contracts. Among the many long-established suppliers reliant on Marks & Spencer are William Baird, Dewhirst and SR Gent. The footwear sector suffered from high and rising imports much earlier than most clothing sectors, and UK capacity was severely reduced by the mid-1990s. The two outstanding producers left, with production within and outside the UK, are both private companies: C&J Clark, and R Griggs Group. Clarks is a general footwear producer and also the UK s largest retailer of footwear, mainly through Clarks, K Shoes and Ravel outlets. The Griggs group of companies makes the famous Dr Marten brand of heavy shoes and boots which have crossed over from industrial use into fashion. EXPORTING OPPORTUNITIES Ironically, the period of rising import penetration has not necessarily deterred UK manufacturers as exporters, because the exporting comes mainly from smaller, specialised companies. The export ratio of production reached its all-time peak in UK clothing in 2000, at 59% of the value of UK production. In footwear, exports peaked in the mid-1990s but are estimated to have stayed at around 50% in recent years, compared to 42% in The specialist activities continue to thrive because they involved skilled workmanship and the production of famous, quality brands in clothing and footwear. Areas of strength include tailored shirts, accessories and safety footwear. Key Note Ltd

22 Executive Summary UK Clothing & Footwear PREFERENCE FOR INTERNATIONAL BRANDS Where UK companies have made progress in exporting, it is usually because they possess brands which are famous in other countries, particularly as luxury or specialised brands. There has been an international trend towards buying clothing and footwear brands with sports or designer labels, and this factor has also undermined the retailers such as Marks & Spencer and C&A, which rely on the profit margins produced by selling only their own label. A consumer survey for Key Note in 2001 found that the big three sports wear brands had each been bought by a high proportion of UK adults in 2001: a 42% score for Nike, 41% for adidas and 38% for Reebok. Among younger age groups, penetration for these brands rose much higher; for example, 70% of 16 to 24 year-olds bought at least one Nike product in These brands are not usually bought for active sport, but as fashionable leisure wear. The sports brands were the engine behind a move towards buying clothing by brand, rather than by store name, in the late 1990s. The young, affluent and fashion-conscious still appreciate sports-based brands but they have also moved on to buying designer brands from couture houses. Calvin Klein is the most successful example of a designer name which has crossed over into the mainstream, mainly by targeting the branded underwear market. The Key Note survey found that nearly a third of adults had bought a Calvin Klein product in Many of the famous names which were once only associated with the catwalks at international fashion shows are now openly advertised in the UK media as general ranges of clothing and footwear at accessible prices. MARKET PROSPECTS UK manufacturing of clothing and footwear appears to be destined to dwindle down to a small fraction of its former size if current trends continue. Market potential will therefore come from the domestic retail market, although the current period of price deflation does not augur well in the near future. Key Note forecasts a better period of growth than the 1996 to 2000 period, assuming that prices will firm up (against a background of higher inflation in the economy generally). 4 Key Note Ltd 2001

23 UK Clothing & Footwear Executive Summary Apart from the pricing issue, the major underlying trends affecting the apparel markets in the next few years will be extensions of the important changes which started to impact in the late 1990s: The ongoing trend towards more casual dress being acceptable, even in the workplace ( dressing down ). Demand for quality, branded casual clothing and footwear, offsetting the danger of dressing-down leading to scruffiness. Adaptation of materials technology for sports and leisure wear and footwear. Changes in the retailing structure, where there will be more emphasis on stores which sell specifically manufacturer-branded ranges (including designer labels and sports brands), together with more family clothing being bought from superstores. Key Note Ltd

24 Executive Summary UK Clothing & Footwear 6 Key Note Ltd 2001

25 SECTION ONE MARKET OVERVIEW

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27 UK Clothing & Footwear Market Overview 1. Market Overview INTRODUCTION This Review examines the UK market for clothing and footwear in terms of industry structure, distribution and retailing, consumer profiles and market segmentation. Coverage is restricted to consumer markets, so that work wear, corporate wear and uniforms are not covered. Clothing Definitions Traditionally, clothing is defined industrially, or from the supply side, based on the two manufacturing processes: weaving is the most widely used process, producing most outer wear and underwear knitting is used for hosiery (socks, tights and stockings) and for knitwear such as pullovers and cardigans; the process is suited to certain materials and is used where flexibility and stretching are required. The materials used in manufacturing also define the product range, from completely natural thread and fabrics (cotton and wool) through to completely artificial garments (nylon, polypropelene, polyester, etc.). From the demand side, clothing divides by target market: by age and gender (i.e. men s, women s, children s and infants ) and by size of garment. Footwear Definitions In footwear, similar definitions and divisions can be made, by material (leather, rubber and man-made materials), and by gender and size. There is also a basic market division between shoes and boots. Distinct footwear types include sandals, various types of trainers and running shoes and hiking boots. Further definitions are given later in this section, under the heading Market Segmentation. Key Note Ltd

28 Market Overview UK Clothing & Footwear Information Sources and Trade Associations Government Sources Commercial Sources Clothing and footwear manufacturing are important bases for employment and international earnings, and therefore government statistics have traditionally been provided in considerable detail. Sources include the Family Spending, Consumer Trends and the Monthly Digest of Statistics, as well as detailed foreign trade statistics (for a market in which imports have a dominant market share). In contrast, commercial statistics on the consumer markets within the UK are not as easy to provide, due to intense market fragmentation (by retail outlet, type garment, etc.) and the changes brought by fashions. The problem for measuring demand for a particular line is that by the time current demand has been analysed, the season will have changed and fashions will have moved on, making the information redundant. The best known private monitoring system of sales through retail outlets is the Fashion Trak audit, by Taylor Nelson Sofres. Key Note commissioned its own consumer survey for this Review, examining the type of outlets used to buy clothing and footwear, and the importance of designer brands. Statistics on purchasing patterns are also available in BMRB International s Target Group Index (TGI), and are used in this Review. British Apparel & Textiles Confederation Other Trade Associations The British Apparel & Textiles Confederation (BATC), which represents the clothing industry in the UK, collects statistics and publishes statistical overviews of the industry (through the Textile Statistics Bureau, based in Manchester). Other support organisations include the Textiles, Clothing and Footwear Unit within the Department of Trade and Industry (DTI) and the Association of Suppliers to the British Clothing Industry. The main trade association for footwear is the British Footwear Association. 8 Key Note Ltd 2001

29 UK Clothing & Footwear Market Overview INDUSTRY STRUCTURE The BATC has expressed the significance of the clothing industry sector to be as follows: The UK clothing and textile industry is one of the most important parts of the manufacturing economy of the UK. It is the fifth-largest employer in manufacturing, with many of the jobs being in areas of otherwise high unemployment. Some 11,000 companies are involved in the manufacture of clothing and textiles, with the large proportion employing fewer than 100 people, although the UK also has some of the largest companies in Europe in Coats Viyella PLC and Courtaulds Textiles PLC. On behalf of the footwear industry, the BFA claims that: The UK is the fifth-largest producer of footwear in the EU. Exports and re-exports of footwear from Britain doubled in value throughout the 1990s, and the reputation of British brands in global markets is the main high point of the industry. Along with quality manufacturers, British footwear enjoys many lively designer brands, helped by a fertile design education system. Both sectors are characterised by being large scale, with fragmentation across small manufacturers. The sprawling scale of the clothing and footwear industries is quantified in the analysis of VAT-based enterprises published annually in the Business Monitor PA1003 series. Changes in the number of companies can be influenced by the VAT threshold, but there has definitely been a decline in the number of manufacturing enterprises over the last 2 years from 8,450 to 7,010. Key Note Ltd

30 Market Overview UK Clothing & Footwear Table 1.1: Number of VAT-Based Enterprises Engaged in the Manufacture of Clothing and Footwear by Turnover Sizeband (number of enterprises and %), 1998 and Number of % of Number of % of Enterprises Total Enterprises Total Turnover ( 000) , , , , , , , ,000-4, , Total 8, , does not sum due to rounding to nearest 5 by source does not sum due to rounding Source:Business Monitor PA1003 Size Analysis of UK Businesses The enterprises in Table 1.1 may be part of larger groups, although the vast majority are independents. There has been a decline in the number of manufacturers of all sizes, but the structure remains broadly the same, with the most typical company having a turnover of 100,000 to 249,000. Only 4% of companies fell into the 5m and over category in 2000, but the scale of the sector means that there were still 280 companies of this size in the UK. The sector is characterised by three distinct types of operation, each contributing to the relatively fragmented structure: long-established, large manufacturers, mainly producing clothing or footwear to supply under contract to retailers such as Marks & Spencer smaller companies producing short-run fashion items, mainly for sale through independent outlets specialists in quality, premium-priced clothing and footwear, often made with a view to exporting. 10 Key Note Ltd 2001

31 UK Clothing & Footwear Market Overview There are both general clothing manufacturers as well as companies specialising in certain technologies, materials or consumer markets (e.g. women s lingerie or babywear), hence the large other clothing category in Table 1.2, involving 2,615 companies. Table 1.2: Number of VAT-Based Enterprises Engaged in the Manufacture of Clothing and Footwear by Sector by Turnover Sizeband (number of enterprises and %), 2000 Number of Enterprises % of Total , , Total 7, manufacture of other wearing apparel and accessories not elsewhere classified 1822 manufacture of other outer wear 1823 manufacture of underwear 1772 manufacture of knitted and crocheted pullovers, cardigans and similar articles 1930 manufacture of footwear 1821 manufacture of work wear 1771 manufacture of knitted and crocheted hosiery 1810 manufacture of leather clothes 1830 dressing and dyeing of fur; manufacture of articles of fur Source:Business Monitor PA1003 Size Analysis of UK Businesses The official VAT-based analysis of manufacturing also measures the number of local units rather than the businesses which own the factories. This produces much higher figures than the business basis, due to multiple ownership of factories. Key Note Ltd

32 Market Overview UK Clothing & Footwear Table 1.3: Number of VAT-Based Local Units Engaged in the Manufacture of Clothing by Sector by Employment Sizeband (number of local units), 2000 Employment Sizeband Under Total , , , , Total 4,835 1, , manufacture of other wearing apparel and accessories not elsewhere classified 1822 manufacture of other outer wear 1823 manufacture of underwear 1772 manufacture of knitted and crocheted pullovers, cardigans and similar articles 1771 manufacture of knitted and crocheted hosiery 1821 manufacture of work wear 1810 manufacture of leather clothes 1830 dressing and dyeing of fur; manufacture of articles of fur does not sum due to rounding to nearest 5 by source Source:Business Monitor PA1003 Size Analysis of UK Businesses Fragmentation at the manufacturing level, echoing the image of a small-scale rag trade, is shown in the large proportions of units with only a small number of employees. 12 Key Note Ltd 2001

33 UK Clothing & Footwear Market Overview OUTPUT AND EMPLOYMENT Statistics on clothing and footwear gathered regularly by the Government make for bleak reading, with output having declined over the long term and suffering an even worse fate in recent years. The strength of the UK economy has posed more of a problem for the sector than any consumer trends: the strong sterling has sucked in imports and made it even harder to maintain the export levels that traditionally sustain much of UK manufacturing. The latest available index of production for the sector (Table 1.4) shows that the output of the textiles, clothing and leather sector as a whole was over 20% lower in 2000 than in Table 1.4: Indices of Industrial Production (index 1995=100), e 2000 All UK production industries Textiles, clothing and leather Of which: Apparel Of which: outer wear underwear other e Key Note estimates, based on part of year includes accessories Source:Monthly Digest of Statistics/National Statistics/Key Note In a fashion-conscious industry, it remains true that fast-moving small companies and entrepreneurial designers quickly spring up to take advantage of upturns in the economy, especially at the fashion end of the market. However, the underlying problems facing the industry are illustrated by Table 1.5. Even without any recession or economic downturn having taken place for many years in the UK, the strong sterling has encouraged imports and brought down prices in the High Street to levels that are uneconomic for UK manufacturers. Key Note Ltd

34 Market Overview UK Clothing & Footwear Table 1.5: UK Manufacturers Sales of Clothing by Garment Type ( m and %), % Change Women s outer wear 1,732 1,603 1,662 1,302 1, Women s underwear 1,044 1,014 1, Men s outer wear 1,011 1, Men s underwear Hosiery Knitwear Hats Other clothing and accessories Total 6,495 6,483 6,404 5,525 4, pullovers, cardigans and similar articles including children s clothing for listed items: not comprehensive for whole of clothing industry Source:Monthly Digest of Statistics/Key Note The bright spots in manufacturing are the smaller, specialised areas grouped together under other clothing and accessories, together with men s underwear. Employment in Manufacturing The decline in manufacturing output is paralleled, inevitably, by a reduction in the number of jobs supported by manufacturing clothing and footwear. The figures for the sector (including textiles and all leather) show that one in four jobs were lost between 1995 and 2000, although 1998 to 2000 was also a period in which employment in UK manufacturing as a whole was declining. 14 Key Note Ltd 2001

35 UK Clothing & Footwear Market Overview Table 1.6: Indices of Employment in Manufacturing (index 1995=100), e 2000 UK economy All UK production industries Textiles, clothing and leather e Key Note estimates, based on part of year Source:Monthly Digest of Statistics/National Statistics/Key Note The absolute numbers show that employment in the more specific apparel and leather goods industries has fallen, from almost 200,000 in 1995 to 127,500 by the end of The downward trend has been particularly hard for women, who traditionally outnumber men in apparel production; similar numbers of both sexes work in leather goods production. Table 1.7: Number of Employees in the Clothing and Footwear Industries (000), Apparel Leather Goods Total All Employees Women Table continued overleaf... Key Note Ltd

36 Market Overview UK Clothing & Footwear Table 1.7: Number of Employees in the Clothing and Footwear Industries (000), table continued from previous page Apparel Leather Goods Total Men includes footwear; footwear accounts for around two-thirds of jobs in the leather industries Source:Labour Market Trends/National Statistics/Key Note Some sectors of the clothing industry have fared better than others, although employment data is no longer surveyed in as much detail as in the past. The manufacturing of knitted fabrics and of clothing accessories has been maintained reasonably close to the level of 5 years ago, but there have been slumps in production (and employment) for woven outer clothing, underwear and work wear. Clothing manufacturing has traditionally been important because it employs a variety of people men and women, old and young, skilled and semi-skilled and it also offers opportunities for seasonal and part-time employment. PEST ANALYSIS Political Factors The apparel industry was once a political hot potato for the UK and other major manufacturing countries, due to the number of jobs that the sector used to be capable of supporting. The issue of cheap imports dates back to the UK s colonial days, when the Indian sub-continent developed as a source of cheap textiles and clothing in competition with the mills and factories of northern England. In more recent times, however, it has been accepted that developed countries will not be able to compete with countries with low-cost manufacturing bases for this labour-intensive industry. Political attention has shifted from job losses in the developed countries to the operations of multinational apparel companies, such as Nike and Gap, which have attracted protesters against the use of low-paid workers in developing countries. European legislation with an impact on this sector includes instruments covering minimum wages, working time and imports from outside the EU. 16 Key Note Ltd 2001

37 UK Clothing & Footwear Market Overview Economic Factors The UK s economy has resisted any cyclical trend back into recession under the Labour Government since 1997, and the party seems likely to regain power in the next General Election, due in 2001 or A closer analysis shows that certain elements of the economy have supported the GDP growth, biased towards service industries, retailing and the financial sector and some sunrise industries (e.g. mobile telephony). Meanwhile, traditional industries have continued to decline, among them former major employers which include engineering, automotives and clothing and footwear. The underlying tendency, as economies develop, is for staple items such as food and clothing to lose their relative importance in the typical household. According to the long-running Family Spending, published by National Statistics, apparel accounted for 10.3% of household spending in By 1975, this share was down to 8.7%, and to less than 6% by the end of the 1990s. Social Factors Dress codes have reflected social change since the Industrial Revolution. However, the way that people dress is integral to how they regard themselves, and is not entirely dictated by the clothing industry or by fashion, as publicised in the media. Social fragmentation in the second half of the 20th century produced tribes of young people who had the discretionary income to spend relatively lavishly on clothes to fit their lifestyle. Youth movements such as Teddy Boys, Skinheads and Hippies all came with a distinct style of dress and music. In the 1990s, the clubbing lifestyle, combined with a sense of economic well-being, was accompanied by certain looks, favouring light clothing and footwear and with an emphasis on designer labels. For older people, styles of dress are naturally less volatile. However, this started to change in the late 1990s, with dressing down for work threatening the traditional dress codes for employees. The other major social trend has been the interest in health, fitness and sport, which has allowed sports wear to dominate the whole of the leisure wear market. Technological Factors Allied to the boom in sports wear, and the general demand for clothing and footwear for an active leisure lifestyle, have been technological advances. New materials make casual clothing hold its shape and look better, thus contributing to casual garments being suitable for relatively formal occasions. Layered products such as Gore-Tex also make it more comfortable to take part in outdoor pursuits. A flexible material like Lycra, from Du Pont (it has been possible for manufacturers to brand their technological advances), is now incorporated into a wide range of clothing, and not just sports wear. Key Note Ltd

38 Market Overview UK Clothing & Footwear There are limits to the technological look, however, and manufacturers of trainers have sometimes stepped over the line. Retro styles often come back into vogue, and there is always a demand among the more affluent for natural materials (pure cotton, wool, cashmere, leather, fur, etc.). THE TOTAL MARKET Consumers spent 34.15bn on clothing and footwear in 2000, representing their highest ever outlay on these products. However, the share of total consumer spending accounted for by clothing and footwear has continued to decline, reaching an all-time low of 5.8% in In 1994, this share was 6.4%. Table 1.8: The Total UK Clothing and Footwear Market by Value at Current and Constant 1994 Prices ( m at rsp), Current Prices Constant Prices ,893 26, ,347 27, ,564 27, ,115 28, ,446 28, ,530 29, e 34,150 29,063 rsp retail selling prices e Key Note estimates Source:National Statistics/Key Note In Table 1.8, the spending figures are deflated to 1994 prices using the general, all-items Consumer Price Index (CPI). On this basis, spending in 2000 was slightly lower than in 1999, once inflation is taken into account. In reality, prices for most clothing and footwear have not kept up with the CPI, and have actually fallen in recent years. A separate price index for clothing and footwear items will be used in the following sections, rather than the general CPI. If the specific index were applied to the figures above, spending on clothing and footwear in real terms would show a rise, because of negative inflation from 28.7bn in 1998 (when prices started to fall) to 30.5bn by Key Note Ltd 2001

39 UK Clothing & Footwear Market Overview MARKET SEGMENTATION Using government figures for consumer spending, the broad sectors of the market are shown in Table 1.9. Table 1.9: The UK Clothing and Footwear Market by Sector by Value at Current Prices ( m at rsp and %), % of Total e Clothing Women s, girls and infants 15,266 17,095 18, Men s and boys 8,297 8,919 9, Clothing accessories 1,600 1,800 2, Total clothing 25,163 27,814 29, Footwear 4,401 4,632 4, Total 29,564 32,446 34, rsp retail selling prices e Key Note estimates includes other clothing spending, e.g. hiring, repairs, haberdashery and materials Source:National Statistics/Key Note There has been an increase in share for the largest category (women s, girls and infants clothing), which has been driven forward by expenditure on designer brands and higher spending by girls (5 to 14 year-olds). Menswear has lost share with the acceptance of less formal dress codes, coupled with price pressures on leisure wear. Footwear has been fairly static in recent years at around 4.6bn. The women s clothing category is centred on womenswear, but this expenditure includes girls clothing and infants clothing (or babywear), and also takes in the market for accessories and miscellaneous clothing expenditure. Key Note Ltd