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a) The current situation in the UK and regional markets (market segments, key players, sales practices, trends, opportunities and threats)

The UK clothing market is essentially mature, following changes in the profile of the UK retail market for clothing during the 1990s. There was a major shift away from traditional sources of purchasing, such as department stores, clothing independents and variety stores, in favour of discounters, supermarkets and sports outlets. This reflects the ‘casualisation’ of the UK and the downward pressure of cheaper, imported products on retail price levels. Shopping for clothing and footwear is increasingly moving away from the traditional high street locations to out-of-town shopping centres, where families may typically spend a good part of a day browsing and shopping in a wide range of stores, rather than visiting their local high street to shop in specific outlets.

Mainstream women’s clothing is still strongly populated by private labels from variety stores, such as Marks & Spencer or Bhs, and clothing specialists, such as Next, River Island and Principles. Premium product ranges remain focused primarily on department stores and there is some degree of “trading up” to labels such as Alexon, Planet, Viyella or Jaeger by consumers with greater disposable income levels (Global Market Information Database, 2005). Discounters significantly strengthened their share of consumer purchasing over the last two decades, largely due to the success of the Matalan and Primark chains. However, there are indications in the last two years that strong growth in the position of supermarket groups, largely due to their expansion into fashion wear, is beginning to shift value-driven purchasing in their favour away from discounters, though this shift is not yet decisive. Supermarkets are becoming increasingly involved in clothing; with companies such as Asda, Tesco and J Sainsbury have all launched clothing collections under a brand identity during the past few years. For example, J Sainsbury commissioned fashion designer Jeff Banks to launch a clothing range and Asda’s George at Asda range quickly became well-established, making supermarkets increasingly key players in the market. However, supermarkets still tend to focus on price, rather than fashion, and are thus not yet truly key players on the scale of Marks and Spencer, Next and Matalan (Global Market Information Database, 2005).

The UK consumer increasingly regards an item of clothing or footwear as a disposable item, rather than an investment and this has affected both consumers’ approaches to purchasing decisions, and the fashion marketers’ sales practices. Whilst quality remains important, as an item must be fit for use, fashion styles play a much greater role in everyday purchasing than previously, so that a piece of clothing may not be expected to last longer than one season. This, in turn, places an emphasis on price levels; and the significantly increased availability of ‘value’ brands in supermarkets and discounters, which stimulates volume purchasing without contributing to value sales development. There is also a growing emphasis on purchasing clothing for leisure use, which has a direct impact on the sales practices used, and on their styling. The dramatic increase in purchasing of sports clothing and footwear during recent years was largely underwritten by fashion marketing, rather than by a significantly higher level of participation in active sports.

Although a necessary requirement of life, which requires regular replacement for functional reasons, let alone in response to fashion trends, clothing sales show an increasing trend of been strongly affected by price discounting during recent years (Global Market Information Database, 2005). Increased competition at retail level, particularly due to the growing involvement of supermarkets and discounters, is causing deflation on prices in most UK clothing and footwear. This situation has been further exacerbated by the growing globalisation of product supply, with formerly UK production increasingly relocated to low-cost production units in the Far East and Eastern Europe.

This major shift of production of clothing away from the UK t