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Major Trade Issue At Present Is The Republic Of China Which Flooded The US And EU Markets With Cheap Products After The End Of A World Trade Agreement In 2005

Dublin (PRWEB) April 24, 2006

Research and Markets (http://www.researchandmarkets.com/reports/c36016) has announced the addition of Clothing and Footwear Industry Market Review 2006 to their offering

The UK clothing and footwear market was worth an estimated £44.45bn in 2005, accounting for just under 6% of total consumer expenditure. The historical perspective is important, showing that this proportion of the typical household budget was 10% back in 1960, so that clothing (worth £38.35bn) and footwear (£6.1bn), although among the basic human needs, are now less of a spending priority.

The ability of consumers to spend less has been partly due to falling prices for these products. Between 2001 and 2005, average clothing and footwear prices fell by 14.4%, while the general cost of living went up by 12.6%, so that shoppers are buying far more in volume terms, even though their spending in current prices is increasing only modestly.

In current terms, between 2001 and 2005, 21.2% more was spent on clothing for women, girls and infants, taking the market to £24bn in 2005. Much less (£12bn) was spent on men’s and boys’ clothing, which also grew more slowly between 2001 and 2005 (14%). Accessories and other clothing costs (hire, cleaning, dressmaking, etc.) contributed a value of £2.35bn in 2005.

Falling prices are basically the result of importers and retailers being able to source cheaper supplies from countries where production costs are lower. The major trade issue at present is the Republic of China which, following the end of a world trade agreement in 2005, flooded the US and EU markets with cheap products. In 2006, restraining action is being imposed on cheap Chinese exports, and this could lead to some firming up of prices.

Discounting is also rife in the ultra-competitive UK retail market for clothing where, according to our field research, a dozen major types of outlets are used for buying clothing or footwear, including department stores (the most popular of all), independent boutiques and fashion chains, designer outlets and street markets. Marks & Spencer remains the overall leader in the sale of clothing, but its share is slipping, along with those of other mid-market stores, one of which — Littlewoods — closed its doors in 2005. Stern competition is provided by discount specialists (e.g. Primark and TK Maxx) and the non-food departments of multiple grocers such as Tesco and ASDA.

With cheap and discounted products being so widely available, many younger consumers are distancing themselves by showing an interest in formerly exclusive, internationally renowned brands, e.g. Prada (Italy), Chloe (France), Hugo Boss (Germany), Burberry (UK) and Donna Karan (US), to name a small selection.

The rise of cheap imports has been near-fatal for much of UK manufacturing, where employment in the whole of the textiles and leather-goods sector has slumped from nearly half a million in the 1980s to less than 140,000 by 2005. Output has shrunk severely but is now focused on specialist clothing or luxury products, of which the vast majority are made in the UK for exporting to wealthy consumers in other developed countries.

The former, large-scale producers of general clothing and footwear have virtually disappeared from the UK. One successful exception, however, is C&J Clark Ltd (Clarks), the UK’s largest manufacturer — although this is now undertaken overseas — and also its leading footwear retailer. A family-owned company with a turnover approaching £1bn, Clarks typifies the modern operator by being vertically integrated, from design and manufacturing to importation to retailing. The previously clear boundaries between manufacturer and retailer have also been crossed by successful companies such as Gap Inc — the world’s largest clothing retailer, with over 100 UK stores — and Next PLC, which ranks among the top three in the UK clothing market, with Marks and Spencer PLC and Arcadia Group Ltd (the owner of Topshop, Burton, Dorothy Perkins, Bhs and other chains).

An exception to the rule of vertical integration is provided by sportswear, which features three colossal, globalised manufacturers — Nike, adidas and Reebok — which prefer to retail their goods through the sports specialists. adidas bought Reebok in 2005 and consolidation has also taken place in UK retailing; three companies now own more than 1,200 outlets between them: JJB Sports, JD Sports and Blacks Leisure.

The immediate future is uncertain, owing to the Chinese trading situation, and the clothing trade is nervous as consumer confidence falls. However, we see no need to predict a major change in the growth pattern of this mature market. Maturity means more polarisation between the discounters — aided by cheap imports — and the full-price retailers. The latter are capitalising on younger consumer demand for couture-house designs, quality materials and the individual styles sold as part of the growing `fast fashion’ trend, in which retailers entice customers by displaying only a few garments for a short time before introducing new styles.

Companies Mentioned:

Burberry Group PLC

Courtaulds Textiles (Holdings) Ltd

Crystal Martin Holdings Ltd

Delta Textiles (London) Ltd

French Connection Group PLC

Jacques Vert PLC

Levi Strauss (UK) Ltd

Stirling Retail Services Ltd

Arcadia Group Ltd

Marks and Spencer PLC

Next PLC

C&J Clark Ltd

Nike

Adidas

Reebok

For more information visit http://www.researchandmarkets.com/reports/c36016

Laura Wood

Senior Manager

Research and Markets

Fax: +353 1 4100 980

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