By Max Clarke
The premium market will enjoy the strongest rate of growth in the clothing sector over the next three years according to new research by Barclays Corporate.
By 2014 the premium segment is expected to be worth an estimated £8.6 billion, an increase of £1.9 billion (29 percent) from today’s estimated value of £6.7 billion. The sector is expected to benefit from a number of factors, including the ‘Middleton effect’ which has already catapulted key pieces from Reiss and Whistles collections’ onto the front pages of newspapers and magazines around the world.
Richard Lowe, Head of Retail and Wholesale at Barclays Corporate said: “Kate Middleton is expected to do for many British High Street names what Michelle Obama did for J Crew in the US. Shoppers really get inspired by these big glossy images of her in styles which are very accessible.”
Despite slowing sales in recent months, top-end retailers defied recessionary trends enjoying a 6.2 percent increase in growth over the past two years as an additional 3.4 million consumers lent towards buying fewer, more expensive pieces and mixing and matching with value items. The premium end of the market has also benefited from Britain’s ageing population as older consumers place more emphasis on quality and service over price. This is expected to lead to a shift in focus for many retailers which will increasingly tailor offerings to the older shopper.
Richard Lowe continued: “This is starting to be borne out by a subtle shift in consumer mindset which is taking shape. High street consumers want quality as well as value, and are happy to trade up to buy statement pieces. That said, the value end of the market will remain buoyant and enjoy continued growth.”
The number of consumers shopping at the value end of the market has more than doubled during the past decade. Today 57 percent of consumers regularly use value retailers with almost half of these coming from the affluent ABC1 demographic. The research estimates this segment of the market will grow from £9.9bn to £12bn (around 21 percent) during the next three years — slower than pre-recessionary growth rates.
As a whole, the clothing industry is expected to see real growth of 9 percent by 2014 but, retailers will have to work hard and adapt to survive as the premium market share grows.
Richard Lowe continued: “The clothing market will undoubtedly become more competitive with the middle market feeling the squeeze. I would expect to see a shift in price structure with key players focusing on premium in order to maintain growth and bolster margins.”