KN18033

KEY NOTE CLOTHING AND FOOTWEAR REVIEW: APRIL 2003

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This report covers: clothing, footwear, women's outer wear, underwear, hosiery, knitwear, hats, accessories, men's outer wear, girls' clothing, infants' clothing, sports brands, designer brands, retail outlets, trousers, jeans, shorts, blouses, skirts, suits, jackets, ensembles, nightwear, waterproof jackets, dresses, babywear, foundation garments, hosiery, shirts, pyjamas, socks, vests, T-shirts, sports wear, leisure wear, fleeces, tracksuits, polo shirts, football kit, golf, swimwear, wool, gloves, scarves, shawls, ties, handkerchiefs, running shoes, boots, soccer boots, sports shoes, trainers,

Companies covered include: Alexandra, Alexon Group, Dewhirst group, William Baird, Burberry, Coats, Courtaulds Textiles, Dawson International, Delta Babygro, Laura Ashley, Levi Strauss, Martin International Holdings, Sherwood Group, SR Gent, Stirling Group, C & J Clark, R. Griggs, adidas-Solomon, Nike, Pentland Group, Reebok International,

TABLE OF CONTENTS

Executive Summary 1

INTRODUCTION 1

MARKET SECTORS 1

RECENT MARKET TRENDS 1

BRANDING TRENDS 2

MAJOR RETAILERS 2

MANUFACTURING AND FOREIGN TRADE 2

FUTURE PROSPECTS 3

1. Industry Overview 14

REPORT COVERAGE 14

Report Background 14

ECONOMIC TRENDS 15

Population 15

Table 1.1: UK Resident Population by Sex (000), Mid-Years 1998-2002 15

Gross Domestic Product 16

Table 1.2: Index of Growth in UK Gross Domestic Product at Current Prices (index 1995=100), 1997-2001 16

Inflation 16

Table 1.3: UK Rate of Inflation ( percent), 1998-2002 16

Unemployment 16

Table 1.4: Unemployment Rate and Actual Number of Unemployed Persons ( percent and 000), 1998-2002 17

Household Disposable Income 17

Table 1.5: Index of Household Disposable Income (index 1971=100), 1997-2000 17

MARKET SIZE 18

Table 1.6: The Total UK Clothing and Footwear Market by Value at Current Prices (£m at rsp), 1998-2002 18

Table 1.7: The Total UK Clothing and Footwear Market by Value at Current and Constant 1998 Prices (£m at rsp and index 1998=100), 1998-2002 19

MARKET SEGMENTATION 19

INDUSTRY STRUCTURE 20

Industry Synopsis 20

Table 1.8: Industry Synopsis for Clothing and Footwear Manufacturers (medians/averages), 2003 21

Industry Concentration 21

Number of UK Businesses 22

Table 1.9: Number of UK VAT-Based Enterprises Engaged in the Manufacture of Clothing and Footwear by Turnover Sizeband (number and percent), 1998, 2000 and 2002 23

Table 1.10: Number of UK VAT-Based Enterprises Engaged in the Manufacture of Clothing and Footwear by Product Category (number and percent), 2002 24

Employment 24

Table 1.11: Number of UK VAT-Based Local Units Engaged in the Manufacture of Clothing and Footwear by Employee Sizeband, 2002 25

Distribution 25

Table 1.12: Retail Outlets Used for Buying Clothing and Footwear ( percent of adults), 2001 26

MARKET POSITION 27

KEY TRENDS 27

Import Penetration 27

Vertical Integration 27

Branded and Designer Clothing and Footwear 28

Traditional Brands 28

Retail Ownership Changes 29

Price Deflation 29

LEGISLATION 29

KEY TRADE ASSOCIATIONS 30

The British Apparel & Textile Confederation 30

British Footwear Association 30

Other Organisations 30

2. PEST Analysis 31

POLITICAL FACTORS 31

ECONOMIC FACTORS 31

SOCIAL FACTORS 32

TECHNOLOGICAL FACTORS 32

3. Key Note Primary Research 33

INTRODUCTION 33

BRAND PENETRATION 33

Table 3.1: Penetration of Clothing and Footwear Brands ( percent of adults), 1998, 2001 and 2002 34

Demographic Analysis of Brand Penetration 35

Sports Brands 35

Table 3.2: Sports Brands and Replica Kits Bought During the Last Year by Sex, Age, Social Grade and Region ( percent of adults), 2002 36

Designer and Denim Brands 37

Table 3.3: Designer and Denim Brands Bought During the Last Year by Sex, Age, Social Grade and Region ( percent of adults), 2002 38

Other Clothing Brands 39

Table 3.4: Other Clothing Brands Bought During the Last Year by Sex, Age, Social Grade and Region ( percent of adults), 2002 40

4. Competitive Structure 42

THE MARKETPLACE 42

Table 4.1: Selected Leading UK Manufacturers of Clothing and Footwear and Their Product Ranges, 2003 44

MARKET LEADERS IN CLOTHING 45

Alexon Group PLC 45

Company Structure 45

Financial Results 45

Dewhirst Group PLC 45

Company Structure 45

Financial Results 46

William Baird PLC 46

Company Structure 46

Financial Results 46

OTHER CLOTHING COMPANIES 46

Alexandra PLC 46

Company Structure 46

Financial Results 46

Burberry Ltd 47

Company Structure 47

Financial Results 47

Coats PLC 47

Company Structure 47

Courtaulds Textiles Ltd 47

Company Structure 47

Financial Results 48

Dawson International PLC 48

Company Structure 48

Financial Results 48

Delta Babygro 48

Company Structure 48

Financial Results 48

Laura Ashley Holdings PLC 49

Company Structure 49

Financial Results 49

Levi Strauss (UK) Ltd 49

Company Structure 49

Financial Results 49

Martin International Holdings PLC 49

Company Structure 49

Financial Results 49

Sherwood Group PLC 50

Company Structure 50

Financial Results 50

SR Gent PLC 50

Company Structure 50

Financial Results 50

Stirling Group PLC 50

Company Structure 50

Financial Results 50

MARKET LEADERS IN FOOTWEAR 51

C&J Clark Ltd 51

Company Structure 51

Financial Results 51

R Griggs Group Ltd 51

Company Structure 51

Financial Results 52

MARKET LEADERS IN SPORTS AND LEISURE BRANDS 52

adidas-Salomon AG 52

Company Structure 52

Financial Results 52

Nike Incorporated 53

Company Structure 53

Financial Results 53

Pentland Group PLC 53

Company Structure 53

Financial Results 53

Reebok International Ltd 54

Company Structure 54

Financial Results 54

OUTSIDE SUPPLIERS 54

MARKETING ACTIVITY 54

Table 4.2: Main Media Advertising Expenditure on Clothing and Footwear by Sector (£000), 2002 55

5. Women's, Girls' and Infants' Clothing 56

INTRODUCTION 56

KEY TRENDS 56

Prices in Women's and Children's Clothing 56

Table 5.1: Retail Price Indices for Women's and Children's Outerwear (index 1998=100), 1998-2002 57

Income and Fashion 57

Variations in Sizing 57

The Impact of New Materials 57

Retailing 58

MARKET SIZE 58

Table 5.2: The Total UK Market for Women's, Girls' and Infants' Clothing by Value at Current and Constant 1998 Prices (£m at rsp), 1998-2002 59

Market Sectors 59

Table 5.3: The UK Market for Women's, Girls' and Infants' Clothing by Sector by Value at Current Prices (£m at rsp and percent), 2002 60

SUPPLY STRUCTURE 61

UK Manufacturing and Exports 61

Table 5.4: UK Production of Womenswear by Value (£m), 1999-2002 61

Imports 62

Retail Distribution 63

Table 5.5: Retail Outlets Used by Women for the Purchase of Clothing and Footwear ( percent of women), 2002 64

Table 5.6: Place of Purchase of Women's and Children's Clothing by Value ( percent), 1997 and 2002 65

Major Retailers 65

Table 5.7: Leading Retail Multiples Selling Women's and Children's Clothing by Number of Outlets, 2002 66

MAJOR PLAYERS 69

Manufacturers 69

Table 5.8: Selected Leading UK Manufacturers of Women's and Children's Clothing and Their Product Ranges, 2003 70

Brands 70

Table 5.9: Brands of Clothing or Footwear Bought by Women During the Past Year ( percent), 1998, 2001 and 2002 71

ADVERTISING AND PROMOTION 72

Table 5.10: Main Media Advertising Expenditure on Women's Clothing and Unisex Ranges (£000), 2002 73

BUYING BEHAVIOUR 75

Women's Outerwear 75

Purchasing Trends 75

Table 5.11: Trends in the Purchasing of Women's Outer Clothing by Type of Garment ( percent of women buying), 1998 and 2002 76

Spending Patterns 76

Table 5.12: Women's Spending on Outerwear in the Last 12 Months by Type of Garment and Amount Spent ( percent of women), 2002 77

Women's Hosiery 77

Purchasing Trends 77

Table 5.13: Women's Purchases of Hosiery by Number of Pairs Bought in the Last 12 Months ( percent of women), 1998 and 2002 78

Women's Underwear 78

Spending Patterns 78

Table 5.14: Women's Spending on Underwear in the Last 12 Months by Amount Spent ( percent of women), 2002 78

Children's Clothing 79

Spending Patterns 79

Table 5.15: Women's Spending on Children's Clothing in the Last 12 Months by Value ( percent of women), 2002 79

FORECASTS 2003 TO 2007 80

Table 5.16: The Forecast UK Market for Women's, Girls' and Infants' Clothing by Value at Current Prices (£m at rsp), 2003-2007 80

Future Trends 80

6. Men's and Boys' Clothing 81

INTRODUCTION 81

KEY TRENDS 81

Trading Up 81

Fashion Influences 81

Prices in Men's Clothing 82

Table 6.1: Retail Price Indices for Men's Outerwear (index 1998=100), 1998-2002 82

The Accessibility of the Market 83

MARKET SIZE 83

Table 6.2: The Total UK Market for Men's and Boys' Clothing by Value at Current and Constant 1998 Prices (£m at rsp), 1998-2002 83

Market Sectors 84

Table 6.3: The UK Market for Men's and Boys' Clothing by Sector by Value at Current Prices (£m at rsp and percent), 2002 84

SUPPLY STRUCTURE 85

UK Manufacturing and Exports 85

Table 6.4: UK Production of Menswear by Value (£m), 1999-2002 85

Imports 86

Retailer Distribution 86

Table 6.5: Retail Outlets Used by Men for the Purchase of Clothing and Footwear ( percent of men), 2002 87

Table 6.6: Place of Purchase of Men's and Boys' Clothing by Value ( percent), 1997 and 2002 88

Major Retailers 88

Table 6.7: Leading Retail Multiples Selling Men's and Boys' Clothing by Number of Outlets, 2002 89

MAJOR PLAYERS 90

Manufacturers 91

Table 6.8: Selected Leading UK Manufacturers of Men's and Boys' Clothing and Their Product Ranges, 2003 91

Brands 91

Table 6.9: Brands of Clothing or Footwear Bought by Men During the Past Year ( percent of men), 1998, 2001 and 2002 92

ADVERTISING AND PROMOTION 93

Table 6.10: Main Media Advertising Expenditure on Men's Clothing and Unisex Ranges (£000), 2002 93

BUYING BEHAVIOUR 94

Shirts and Knitwear 95

Spending Patterns 95

Table 6.11: Spending on Men's Shirts and Knitwear by Men and Women in the Last 12 Months by Amount Spent ( percent of men and women), 2002 95

Socks and Underwear 95

Spending Patterns 95

Table 6.12: Spending on Men's Socks and Underwear by Men and Women in the Last 12 Months by Amount Spent ( percent of men and women), 2002 96

FORECASTS 2003 TO 2007 96

Table 6.13: The Forecast UK Market for Men's and Boys' Clothing by Value at Current Prices (£m at rsp), 2003-2007 97

Future Trends 97

7. Sports and Leisure Wear 98

INTRODUCTION 98

KEY TRENDS 98

Sports and Leisure Wear's Contribution to the Clothing Market 98

Table 7.1: Sports and Leisure Wear as a Proportion of the Total Clothing Market by Value at Current Prices (£m at rsp and percent), 1994-2002 99

The Changing Image 99

Real Sports Wear 99

The Influence of Retailers 100

MARKET SIZE 100

Table 7.2: The Total UK Market for Sports and Leisure Wear by Value at Current and Constant 1998 Prices (£m at rsp), 1998-2002 100

Market Sectors 101

Table 7.3: The UK Market for Sports and Leisure Wear by Sector by Value at Current Prices (£m at rsp and percent), 2002 101

SUPPLY STRUCTURE 102

Manufacturing, Exports and Imports 102

Retail Distribution 103

Major Retailers 103

Table 7.4: Leading Multiple Retailers of Sports Goods by Number of Outlets, 2002 104

MAJOR PLAYERS 104

Manufacturers 104

Table 7.5: Selected Leading Sports Wear Companies in the UK and Their Product Ranges, 2003 104

Brands 105

Table 7.6: Sports and Leisure Wear Brands Bought During the Past Year ( percent of adults), 1998, 2001 and 2002 106

ADVERTISING AND PROMOTION 106

Table 7.7: Main Media Advertising Expenditure on Sports and Leisure Wear (£000), 2002 107

BUYING BEHAVIOUR 107

Table 7.8: Trends in the Purchasing of Sports Wear by Type of Garment ( percent of adults buying), 1993, 1998, 2001 and 2002 108

Spending Patterns 108

Table 7.9: Spending on Sports Clothing and Swim Wear in the Last 12 Months by Amount Spent ( percent of adults), 2002 108

FORECASTS 2003 To 2007 109

Table 7.10: The Forecast UK Market for Sports and Leisure Wear by Value at Current Prices (£m at rsp), 2003-2007 109

Future Trends 109

8. Footwear 110

INTRODUCTION 110

KEY TRENDS 110

Prices in Footwear 110

Table 8.1: Retail Price Indices for Footwear (index 1998=100), 1998-2002 110

Sports and Industrial Influences 111

The Impact of the Rise in Branding 111

MARKET SIZE 111

Table 8.2: The Total UK Market for Footwear by Value at Current and Constant 1998 Prices (£m at rsp), 1998-2002 112

Market Sectors 112

Table 8.3: The UK Market for Footwear by Sector by Value at Current Prices (£m at rsp and percent), 2002 113

SUPPLY STRUCTURE 113

Imported Footwear 113

Manufacturing and Exports 114

Retail Distribution 115

Table 8.4: Retail Shares of Footwear by Type of Outlet by Value ( percent), 1998 and 2002 115

Table 8.5: Place of Purchase of Footwear by Value ( percent), 1997 and 2002 116

Major Retailers 116

Table 8.6: Leading Retail Multiples Selling Footwear by Number of Outlets, 2002 116

MAJOR PLAYERS 117

Manufacturers and Brands 117

Table 8.7: Leading UK Footwear Manufacturers and Their Product Ranges, 2003 118

ADVERTISING AND PROMOTION 119

Table 8.8: Main Media Advertising Expenditure on Footwear (£000), 2002 119

BUYING BEHAVIOUR 120

Spending Patterns 120

Table 8.9: Spending on Footwear in the Last 12 Months by Amount Spent ( percent of men or women), 2002 121

FORECASTS 2003 TO 2007 121

Table 8.10: The Forecast UK Market for Footwear by Value at Current Prices (£m at rsp), 2003-2007 122

Future Trends 122

9. Clothing Accessories 123

INTRODUCTION 123

KEY TRENDS 123

Peaks and Troughs 123

External Influences 123

Fashion Trends 123

Retail Trends 124

MARKET SIZE 124

Table 9.1: The Total UK Market for Clothing Accessories by Value at Current and Constant 1998 Prices (£m at rsp), 1998-2002 124

Market Sectors 125

Table 9.2: The UK Market for Clothing Accessories by Sector by Value at Current Prices (£m at rsp and percent), 2002 125

SUPPLY STRUCTURE 126

Manufacturing, Imports and Exports 126

Retail Distribution 126

Table 9.3: Place of Purchase of Clothing Accessories by Value ( percent), 1997 and 2002 127

Major Retailers 127

Table 9.4: Leading Retail Multiples Selling Clothing Accessories by Number of Outlets, 2002 127

MAJOR PLAYERS 128

ADVERTISING AND PROMOTION 128

BUYING BEHAVIOUR 128

Handbags 129

Spending Patterns 129

Table 9.5: Women's Spending on Handbags in the Last 12 Months by Amount Spent ( percent of women), 2002 129

Men's Ties 129

Spending Patterns 129

Table 9.6: Spending on Men's Ties in the Last 12 Months by Amount Spent ( percent of men or women), 2002 129

FORECASTS 2003 TO 2007 130

Table 9.7: The Forecast Market for Clothing Accessories by Value at Current Prices (£m at rsp), 2003-2007 130

Future Trends 130

10. A Global Perspective 131

INTRODUCTION 131

UK BALANCE OF TRADE 131

Table 10.1: Imports and Exports of Clothing and Footwear (£m), 1993-2002 131

INTERNATIONAL SOURCING 132

GLOBAL BRANDS 133

11. The Future 134

FORECASTS 2003 TO 2007 134

Table 11.1: The Forecast Market for Clothing and Footwear by Value at Current Prices (£m at rsp ), 2003-2007 134

FUTURE TRENDS 135

Reduction in UK Capacity 135

Prospects for Retailers 136

Influence of Fashion and Demographics 137

12. Further Sources 139

Associations 139

General Sources 139

Bonnier Information Sources 140

Government Publications 141

EXECUTIVE SUMMARY

The UK clothing and footwear market was worth £37.75bn in 2002, having increased in value by 3.9 percent since 2001. However, while the market is large and growing, the amount spent on clothing and footwear as a proportion of consumer expenditure has been declining for many years. Since 1960, the share of household spending devoted to these products has fallen from 10 percent to 6 percent.

MARKET SECTORS

The market is broadly split into clothing, which accounts for a large majority of sales value, and footwear. Clothing sales are unevenly split, with a bias towards women's clothing. Defined to include girls' and infants' clothing, the women's clothing sector accounts for approaching two-thirds of all clothing sales. However, men's and boys' clothing has gradually increased its share in recent years. In the footwear market, the balance is different, with men's and children's products accounting for relatively high shares. High proportions of male clothing are bought by women on behalf of men and boys.

Cutting across these `gender-based' markets are the sports wear ranges, which are more unisex in nature and account for the bulk of leisure wear.

The smallest market is accessories, which covers a range of items for both men and women, such as headgear, gloves, ties, belts, scarves, etc., as well as materials for dressmaking and knitting, and the costs of cleaning, hire and repair.

RECENT MARKET TRENDS

Demand from consumers faltered during the late 1990s, but strong growth was resumed around the turn of the decade. Underlying trends tend to be long-term influences and include:

·   the long-term trend towards more casual dress codes, including the sports-based leisure wear category in both footwear and clothing

·   deflation on most clothing and footwear prices, as a result of global sourcing and competition in the high street

·   the rising proportion of women working in full-time occupations, particularly those requiring a high standard of dress (e.g. white collar and service industries)

·   the technological development of new materials (e.g. Gore-Tex and Lycra), which have particularly increased the appeal of sporty and outdoor designs.

BRANDING TRENDS

Manufacturer, or designer, branding has grown steadily in importance over the years, whereas the retail source used to be much more important than the manufacturer brand.

This trend originated in jeans (e.g. Levi's and Wrangler), continued with sports shoes from multinationals such as Reebok, Nike and adidas, and extended across leisure wear, with brands such as Calvin Klein (CK), Kappa and Ellesse. In the early 2000s, a notable feature is the extent to which formerly `exclusive' brands are targeting the mass market, even advertising in the mass media.

In 2002, Key Note's field research among consumers, conducted by BMRB Access, revealed that penetration of the Nike adidas Reebok brands remained high. These are the global `big three' in sports wear and, accordingly, the world's largest clothing brands. These were followed by Calvin Klein, which dominates branded underwear, and Levi's, which is enjoying the renewed demand for denim (as part of the `seventies retro' fashion).

MAJOR RETAILERS

Key Note's survey also found that approaching half all adults had bought a St Michael product — the own label of Marks & Spencer — in 2002. The shift towards manufacturer brands has challenged the dominant position of Marks & Spencer, but it remains the leading clothing retailer, with over 10 percent of the market overall, and much higher shares than this in certain garments.

Apart from this share, distribution is extremely fragmented. Key Note research found that over 50 percent of adults shop for clothing or footwear in the following outlets: department stores, chain stores, independent local boutiques, fashion chains and sports shops. Furthermore, a high proportion buy apparel in supermarkets or superstores, and a significant percentage use mail order.

Within this diversity of retailers, Arcadia Group Ltd is the largest fashion group, and its sister company, Debenhams PLC, is the largest department store group. JJB Sports and Blacks Leisure are now the largest sports retailers.

MANUFACTURING AND FOREIGN TRADE

The import ratios have been high in both clothing and footwear for many years, but UK manufacturing is withering rapidly, with output in some sectors having halved over 5 years. Imports now account for over 90 percent of the UK market as a whole. Strong sectors for the UK, such as hosiery and knitwear, have to survive by exporting.

One of the major problems is that Marks and Spencer PLC used to have a strict policy of sourcing mainly from domestic factories, but it has been forced by retail competition to source more from abroad. Many of the former giants of UK manufacturing have declined in size dramatically, or been broken up. However, others have survived by developing their own capacity outside the UK, in places where labour costs are cheap (mainly the Far East, but also Morocco and Turkey).

As a result of the contraction, the general clothing companies are now much smaller than the large sports brands producers. In footwear, two companies are holding the fort for UK manufacturing — C&J Clark Ltd and R Griggs Group Ltd (owner of the Dr Martens brand).

FUTURE PROSPECTS

The second half of 2002 and the early months of 2003 brought yet more bad news for UK manufacturing, with numerous factories being slated for closure or a reduction in output and employment. In some cases, production is being transferred overseas, but other companies are simply closing down their capacity. For example, several long-established factories making Dr Martens footwear have lost their production to Chinese factories.

Clothing sales will continue to reflect general trends in the consumer economy, since they include both essential items for families and a strong fashion element. Low prices will be characteristic for some years to come. Key Note's forecasts for 2003 to 2007 are for growth to continue on a par with the previous 5 years, at 3 percent to 4 percent a year.

The shift to sourcing abroad will continue, and prospects are very gloomy for UK manufacturing.

Text © 2003 Key Note

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Last updated by Amanda Porteous July 2003