The Rise of Value Retailers

 

Value retailers in the clothing market have grown significantly in recent years, with the market share they acquire growing three times faster than the overall clothing market to 19% in 2004.  While analysts predict that the value-led sector will hold 26% of UK clothing sales, worth £10.1bn by 2009. 

Value retailers are increasing their market share by moving fast on fashion and being hard to beat on price and this is having a profound effect on consumers’ expectations of price and quality.  They are able to provide the consumer with an increasingly sophisticated product offering great ranges, segmentation and niche targeting, with the UK middle market retailers having to reassess key areas of their business in order to keep up and establish their long-term positioning in the market.

 

As economic deflation in Asia is enabling lower-cost garments to proliferate, consumers are demanding lower prices and changing their attitudes towards value fashion.  Along with the fashion offers from supermarkets continually growing in popularity, competition is rife in the clothing sector market.  

 

 

Specialist retailer Primark has notably increased their retail presence in the UK with 87 of its 121 stores in the UK, with the remaining Pennys being in the Republic of Ireland.  A key issue facing the clothing market is that the retailers such as Primark want to expand and with space growth increasingly hard to achieve, the opportunity for Primark to acquire existing Allders stores was an advantage.        

 

 

Primark’s success is down to being a volume-driven £1 billion business, with price being the king.  Primark are meeting consumer’s demands by currently improving quality through low margins and high volumes.  Where as it used to focus on basic clothing, it has changed and stock interprets the key season fashion trends.   

 

Research shows 37% of consumers at M&S like to look in value clothing retailers to see if there is a bargain prior to making a purchase at the mid-market retailer.  However, there is an advantage as  36% of women believe value clothing retailers provide good ranges but 33% feel they are appropriate for everyday use but not for smarter occasions.  This shows there is opportunity in this difficult but strong market and in order to survive mid-market retailers need to know their business to help them achieve a better understanding of the value of the product they sell. 

 

 

With the growth of the value retailers looking set to continue, this could be at the expense of mid-market chains and independent retailers, which could be squeezed even more as consumers tighten their belts further, showing businesses in this sector have to adapt to the major opportunities and challenges which lay ahead.  

 

 

Rachel Costa