Growth in value clothing expenditure will slow substantially in the five year period to 2012, with limited household disposable income restricting discretionary purchases. However, 27.6% growth is a resilient performance, with the key contributors – Primark, Sainsbury's and H&M – increasing their store presence and improving ranges encouraging consumers to spend despite tight purse strings. For the first time, from 2014, we forecast growth in value clothing expenditure to underperform the overall clothing market. A gradual shift in shopping habits of consumers making more considered purchases and wanting better value for money through quality and product design will result in a proportion of consumers trading up to midmarket players Despite the lower costs associated with OOT, high street locations are much more desirable for attracting younger shoppers. While OOT stores remain important for catering to families, value players need to have a presence in high footfall locations to build retail brand awareness – particularly those with a high fashion offer which target 16–24s Logistically, Europe offers more convenient expansion than in regions further afield due its closer proximity to the UK, similar seasons and westernised consumers wanting fashions similar to the UK's. European competitors would include C&A, H&M, Kiabi and TK Maxx so UK players must identify gaps in the markets to ensure successful launches.

1. Value Clothing Retail in the UK | Verdict Market Report
Published August 2012
Verdict Research
Ref: CM00202-003

2. The Ideal UK Value Clothing Retailer in 2016
Provides an Outfit building Target
High footfall Destination Strong use of
Multichannel Fewer
instorestores Showrooms
tools to underserved
locations stores social media
experience increase spend consumers
Ideal Value Clothing Retailer 2016
Contactless Provide an
International
Multichannel payment & instore Social media
presence
self-checkout experience
CM00202-003 Value Clothing Retail in the UK | Verdict Market Report

3. Weaker players still at risk from younger, more fashion targeted retailers
Age
65+ Bonmarché
Ageing population + a
more fashion conscious
TJ Hughes consumer = area of
opportunity
Store Twenty
Ethel AustinSainsbury’s
35 One Asda
Richleys Peacock
Stewarts Matalan Tesco
TK Maxx sMark H&M
Prima New Look
The Officers One
Internacio Select
rk 21
Forever
Club nale Retail
Woolworths
0
Classic Contemporary/ Fashion
mainstream
Entered administration between 2008–12 but Fallen out of the
still trading market
CM00202-003 Value Clothing Retail in the UK | Verdict Market Report

4. Store environment must suit male shopping habits
While value menswear offers opportunities for retailers, they cannot assume that men will shop value retail stores in the
same way women do. Women have more of an interest in fashion and trends, and are more comfortable rummaging stores
and spending time shopping to find clothes they desire. In contrast, men are less likely to want to shop in busy stores and
spend any length of time browsing. Ranges need to be well edited and presented to make it easier for them to shop.
Primark opened menswear concessions in two Selfridges' stores in autumn 2011, which is a sensible move if the value
retailer is to appeal more to male shoppers. These concessions allow male shoppers to access an edited range of clothes
in an enjoyable, premium shopping environment – helping to remove the stigma of shopping at a value clothing shop which
males still find harder to accept than females. While this kind of strategy is difficult for other value retailers to implement,
they need to consider how they can make the shopping environment simple and easy to shop. Displaying fewer options per
sq ft to allow for easier browsing is one option: having more shopfloor staff on hand to keep the floor looking well
presented is another.
Range segmentation would satisfy the desire to shop from brands
Value retailers have started to segment menswear ranges into sub brands, which is an effective way of encouraging men to
spend as they like to buy into specific brands. Matalan, Primark and Tesco have increased their menswear sub brands over
the last three years, but it is an area where retailers can make further improvements, particularly with instore displays and
segmentation. Sub brands need to be well targeted through the product offer and instore visuals so male shoppers know
which range is suitable for their age or style. This will also make the menswear department easy to shop as a sea of
merchandise can be daunting. Introducing sub brands enables retailers to offer a good-better-best price architecture across
menswear ranges – an area which is still underdeveloped compared to womenswear. Value retailer Primark was able to
attract male fashion conscious consumers with its limited edition t-shirts in collaboration with graphic artist Ben Allen in
2010 – it should introduce such ranges again to build awareness among male shoppers of its more fashion-led offer.

5. Slim store portfolio + high footfall locations + smaller formats = enhanced profitability
Retailers estimated space growth, sales density and operating margins 2010/11
500 Operating
margin
450 Prima Tesco percentage
rk10.2 6.2
point change
400
Matalan +6.5
2010/11 on
2005/06 +4.5
TK Maxx
Clothing sales density
(£/sq ft) * Bonmarché
350
+1.6
Tesco +0.2
300 Average Average -0.8
6.7 * Peacocks -
250 New H& 7.4 TK Maxx 1.0
M*3.1
Look 6.7 Primark -4.0
Bonmarch New Look -5.8
200
é *1.8
11.0 * H&M -8.8
Peacock * Operating margin is for 2009/10
on 2004/05
150 Matalan s *7.5
-2 0 2 4 6 8 10 12 14
UK space growth (%)
CM00202-003 Value Clothing Retail in the UK | Verdict Market Report

6. Utilise advancing technology to make shopping more convenient
Multichannel opportunities
Window
Click & collect Outfit building
M-commerce shopping via
kiosks tools
QR codes
Tablet and
Browsing Utilise social
smartphone
lounges media
apps
CM00202-003 Value Clothing Retail in the UK | Verdict Market Report

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