Supermarkets drive growth in value clothing market

Value retailers account for almost one-quarter of the total UK clothing market, according to estimates from retail think tank, Fung Global Retail and Technology, and that growth is being driven by supermarkets and online-only retailers.

The value apparel market was worth nearly 10 billion pounds by the end of 2016 and sales have increased at a compound annual growth rate of 3.4 percent over the past five years, suggesting it is set to continue to grow in 2017.

John Mercer, lead UK analyst at Fung Global Retail and Technology said: “Our research has pinpointed two major growth segments. First, grocery retailers are growing apace, apparently helped by the closure of the BHS chain in August 2016.

“Second, Internet pure-play retailers are drawing in shoppers with ultralow prices and fashionable ranges. Meanwhile, undistinguished, middle-ground retailers targeting shoppers in the family life stage or older shoppers have struggled to gain traction, just as their midmarket retail peers have.”

The report reveals that supermarkets have becoming even more prominent in the value apparel market in the last 12 months. With own-label ranges at Tesco, Sainsbury’s, Asda and Morrisons appearing to have been boosted by the closure of the BHS chain, says Fung Global Retail and Technology. With each of these supermarkets remarking that they had seen strong apparel growth, particularly over the Christmas 2016 period.

Online retailers growing value clothing market due to rapid turnaround

In addition, online retailers such as Boohoo, PrettyLittleThing and Missguided are bringing fast-fashion to the value market, as they can take ranges from concept to sale in as little as two weeks. This rapid turnaround in trends has helped sales growth, with Boohoo stating that sales for fiscal year 2017, ending February 28, were up about 50 percent, while Missguided recently reported that sales were up 34 percent in the year ended March 2016, and that sales rose 60 percent in the subsequent six-month period.

Mercer added: “The structural winners, such as Boohoo.com, are those that offer a fast-fashion product to a young target customer. Unlike more middle-ground value retailers, these young-fashion players are not dependent on mopping up share from the BHS closure.”

The research also added that new entrants, such as Pep&Co and Polish brand Reserved, which is set to open its first UK store this summer, as well as Amazon, are all placing further pressure on longstanding incumbents such as Matalan, New Look and Blue Inc.

Based on Euromonitor data for 2016, Asda has the greatest share of the value clothing market with 27,8 percent, closely followed by Primark with 21.8 percent, with New Look at 10.3 percent, Matalan with 9.8 percent and H&M at 8.1 percent rounding off the top five.

Images: courtesy of George at Asda and Primark