The retail sector is in for a boost over the coming year, according to City analysts who foresee a limited revival of the housing market and increased consumer spending.
Clothes retailers will benefit from the general uplift in spending, although other sectors, such as DIY and electricals, will see a substantial increase in business from any upturn in the housing market.
Analyst Sean Eddie of Natwest Markets says: “Clothing is a defensive area, more akin to food retail – people always buy it, whatever the state of the economy. It will have a much better year, but clothing is not as geared to an economic upturn as home products.”
Eddie also points out that electrical retailing has experienced a decline in capacity following the demise of Rumbelows and many of the Regional Electricity Companies.
But capacity in clothing is growing, with expansion from Marks & Spencer, Bhs and Next, even though the clothing industry has been badly hit by the changing age of the population.
The highest margins, and quickest turnover, are to be gained from consumers aged 15 to 25 looking for short-lived fashions. But this age group is declining in size due to a falling birthrate, and the increasingly long-lived population. Added to this, the youth sector has been hit by the recession, with unemployment being widespread among the clothes retailers’ core market.
But there are still enough young, single people with few spending commitments to give the sector something to work for. Ironically, if the housing market picks up, these “care-free” young could be tempted into buying property, diverting spending away from more spontaneous purchases such as clothes.
Clothes retailers will provide a new focus of interest for advertising agencies in the coming year.
Many chains are relaunching to become more atuned to Britain’s changing population profile, and for the first time taking to television to get their new messages across.
This year will see the relaunches of a number of large fashion chains which have been forced by recession to bite the bullet and redefine their market position.
Laura Ashley is being steered by chief executive Ann Iverson to widen its brand franchise and try to attract a broader range of consumers. The task will be to strike a balance between seeking out new customers, while keeping the core shoppers happy with the Laura Ashley brand. The new positioning will lead to a new advertising campaign.
Etam is another fashion chain which is in for a revamp, under managing director Nick Hollingsworth. The company has had a disastrous two years. But observers do not believe the chain will substantially change its cheap and cheerful image and go upmarket. It is more likely to restate its positioning, only it will attempt to do it better.
The menswear sector is one that has blossomed over recent years.
It underwent a shrinking of capacity in the early Nineties with the demise of chains such as Hornes, but there has been a revival of interest in both casual and formal wear. The influence of male lifestyle magazines and the higher profile of gays means men’s fashions continue to expand.
Last year, Burton Menswear went on television to announce itself as a top-to-toe men’s chain. Evidence is mounting that the Burton Group will look for similar moves with its other chains – it is contemplating appointing new agencies for its Dorothy Perkins and Principles chains.
Another big player likely to appoint an agency this year is Facia, which has bought a number of failing fashion businesses over the past year. With Facia’s plans to run the chains on classic brand marketing lines, it is likely the company will appoint a central agency for its brands, Sock Shop, Salisbury’s, Contessa, Oakland, Red or Dead, Freeman Hardy Willis and Torq.
Sears has just appointed a head of brand development to its board, which could lead to a concerted marketing push from some of its chains. The group has traditionally shied away from advertising, but its chains Richards and Wallis have both completed revamps and could be strong candidates for advertising.
Miss Selfridge is Sears’ weakest chain, and will probably undergo several more attempts at revamping before it considers advertising.
A growth in advertising expenditure by clothes retailers is expected over the next year as the sector becomes increasingly competitive. More chains will be chasing after a small rise in consumer spending.
With Asda boosting its George clothing range, and other supermarket chains increasing the space they give to clothes, branding of clothes chains will assume an importance it has lacked for many years.