UK consumers spend less on clothing than their continental counterparts, according to a new report, Clothing Retailing in Europe, from the retailing consultancy Corporate Intelligence.
The annual figure for the UK is 350 per head, which compares with the equivalent of 450 in France and over 500 in Germany, Italy, Belgium, and Switzerland (over 700). This is despite the fact that the UK retail economy has been growing fast in recent years, whereas it has been flat in France and Germany. In these countries expenditure on clothing has actually fallen.
The proportion of consumer spending devoted to clothing is, however, fairly consistent across Europe at an average of 13 per cent of total consumer expenditure.
To a degree, therefore, the differences in spending are due to variations in overall standards of living: German and French consumers, among others, simply have more disposable income than their British counterparts. The Germans, like the British, allocate 13 per cent of their total retail expenditure to clothing.
However, even allowing for statistical discrepancies, it is evident that some countries have “richer” clothing markets than others, but the report shows the UK is not among them, despite having regained its position among the world leaders of fashion. Those whose share of total European spending on clothing is significantly larger than their share of Europe’s population include Austria, Belgium, Germany, Italy and Switzerland; at the other end of the scale comes the UK, along with countries such as Spain, Portugal and Greece.
Thus, the UK’s share of the total European clothing market is 11.5 per cent, yet it has 15.3 per cent of the Western European population. France, until recent years in the leading group, has slipped back into the main pack. This is because of its recent weak economy and consumer spending cutbacks affecting clothing: it has both 15 per cent of the market and of Europe’s population.
Differences in market size and characteristics notwithstanding, the Nineties have not been kind to the clothing trade, because of recession, a loss of consumer confidence and, in many cases, a real decline in spending on clothes – accompanied by widespread price-cutting as a means of attracting customers into shops.
In such a climate, it is little wonder that there have been winners and losers in most countries.
In the UK, the problems of recession that first hit Next among the major specialist chains at the end of the Eighties, spread to such diverse operations as Burtons, Alexon, Country Casuals, C&A, Sock Shop, Laura Ashley, Mark One and Etam in the Nineties.
Yet the UK has had its share of success stories, too. Next recovered from its tribulations, and has gone from strength to strength. Similarly Oasis, bought out of receivership, is a Nineties success story – a recent blip notwithstanding – while Alexon has recovered impressively too. Chelsea Girl changed itself overnight into River Island, in what Corporate Intelligence calls “a brilliantly executed strategic move”. New Look has successfully moved in on much of Etam’s territory and more – and may even end up acquiring the latter (MW October 23) – while Monsoon, Moss Bros and Tie Rack have all been doing well and Ciro Citterio has established itself as a major force in the difficult menswear sector.
The report also records how the sports and leisurewear retailers, led by JJB, JD Sports Division and Allsports among others, have moved in on the evolving market place and taken share from many traditional specialists, as well as from mixed goods outlets such as the department and variety stores. Only Marks & Spencer has remained largely unscathed.
The report highlights how the number of players and countries involved have been increasing rapidly as ever more European retailers are being forced by competition at home to seek broader markets. This is at the same time as US majors such as The Gap and Levi Strauss, for example, more recently joined by TK Maxx and Timberland, have all followed a similar, global strategy.
In the UK alone, there are 49 foreign-owned mainstream clothing retailers, with close to 1,000 stores between them, led by Benetton, C&A and The Gap. In addition, there are over 50 foreign fashion designer stores in central London, more than a quarter of them opening their doors since the start of 1994, essentially in response to London’s recreation as a fashionable and stylish capital city.
It is by no means one-way traffic either. Of almost 100 UK-based retailers identified by Corporate Intelligence with an overseas presence, no fewer than 35 sell clothing. Many, like New Look, have limited presences, and several, such as Burberrys and Austin Reed, trade on an upmarket British quality image. Those to have developed significant overseas networks include the troubled Laura Ashley, specialists like Tie Rack and Mothercare, plus M&S.
Of particular future interest, says Corporate Intelligence, will be the overseas destiny of two middle-market British operators, the resurgent Next and the reincarnated River Island. Both are first-class businesses in their home market and both have been at least partly prompted to move abroad by the prospect of an increasingly competitive domestic market. They could do well.