UK Value Clothing Retailers 2010

Overview
Summary
Value segment still main growth engine of clothing sector …
… but growth slows;
Primark and Sainsbury are major growth drivers;
New entrants will dilute sales, not expand the market;
Inflation a new challenge;
Economic factors not all in value retail's favour …
… placing it head-to-head with midmarket;
Online development offers growth opportunities;
Executive Summary
Summary points
Value segment still main growth engine of clothing sector …
… but growth slows;
Primark and Sainsbury are major growth drivers;
New entrants will dilute sales, not expand the market;
Inflation a new challenge;
Economic factors not all in value retail's favour …
… placing it head-to-head with midmarket;
Online development offers growth opportunities;
Main conclusions
Value segment still main growth engine of clothing sector – but growth slows
Primark and Sainsbury contribute more than half of value growth
New entrants will dilute sales, not expand the market
Inflation a new challenge
Economic factors not all in value retail's favour – placing it head-to-head with midmarket
Online development offers growth opportunities
Market Analysis
Clothing market trends
Growth returns in 2010
Department stores and grocers make the most gains
Value clothing definition & market trends
Strong growth in uncertain times
Value continues to outperform clothing
Inflation hits hard in 2010 and remains an issue in 2011
Value market channels of distribution and sales mix
Grocers make largest gains
Deepest penetration of childrenswear
Womenswear the major contributor
Space and store numbers
Space receives a boost in 2010
Ethel Austin closure impacts on store numbers
Company Data Analysis
Clothing market shares
Grocers and department stores grow share
Value clothing market shares
Primark continues to lead
Winners and losers
Primark continues to make biggest gains
Key operating statistics
Operating margins
Clothing sales densities
Space allocation
Advertising media expenditure
Outlook
Value segment issues & opportunities
Maturing sector faces new challenges
Issues
Opportunities
Issues
Value segment drives clothing market, but less so as it matures
North-east, north-west and Wales to be worst hit as new economic environment impacts on profitability
Inflation returns to clothing – prices up and volumes down
Overlap with midmarket increases competition
Reduced scale and volume threatens viability
New entrants dilute sales
Opportunities
Cut costs and add value – strategies to offset rising prices
Develop online
Expand internationally
New store formats and flexible space
Invest in marketing
Value segment growth forecast to 2014
Growth will continue to slow
Asda
Work to do as competitors make advances
Recent key events
New initiatives support growth
Proposition
Financials
Profits grow despite sluggish sales
Sales growth slows down once more in 2010
Space
Space
Growth from Asda Living – before including Netto
Space allocation
Sector performance – clothing
Sales densities stay level
Market shares
Outlook
Value price points and good choice no longer enough
Matalan
Benefits from cash strapped shoppers
Recent key events
Pulls sale of company
Proposition
Financials
Growth to slow in 2010/11 against strong comparatives
Sales remain positive in 2010/11
Space
Expansion increases in 2011
Space allocation
Sector performance – clothing
Clothing a star performer in 2010
Market shares
Outlook
Revival and expansion but also tough competition
New Look
Growth to become tougher
Recent key events
Initiatives to drive presence in value clothing market
Proposition
Financials
Value proposition and fashion credentials boost sales
Profit grows
Online sales steam ahead
Space
Refurbishment programme is rolled out as new space slows
International space
Space allocation
Sector performance – clothing
Clothing sales continue to rise
Market shares
Outlook
Upward pressures on prices could hinder competitiveness in the value market
Peacock Group
Growth and profitability under pressure
Peacocks
Recent key events - Peacocks
Question mark over sale
Proposition
Financials
International business boosts sales
Growth opportunities for Peacocks, but will be challenging
Space
Space productivity improves – slowly
Sector performance – clothing
Space allocation
Fashionability and newness helping to increase clothing sales – as well as new space
Market share
Outlook for Peacocks
International compensating for a difficult home market
Bonmarché
Recent key events
Bonmarché launches transactional website
Proposition
Financials
Sliding sales and margins
Space
Space productivity relatively low
Sector performance – clothing
Space allocation
Heading for minor recovery
Market share
Outlook for Bonmarché
Primark
A value star
Recent key events
Maintains momentum
Proposition
Financials
Trading performance provides positive outlook
Sales rocket over a decade
Space
Store growth in UK slows dramatically
Space allocation
Sector performance – clothing
Clothing sales speed up
Market shares
Outlook
Primark well prepared for future growth
Sainsbury
Fast clothing growth driven by space expansion
Recent key events
Presses on with expansion after its recovery
Proposition
Financials
Strong set of results for 2009/10
Margin below past performance
Space
Accelerates space growth
Space allocation
Sector performance – clothing
Market shares
Outlook
Opportunities to continue robust growth in clothing
Tesco
Back on track following a challenging 2009
Recent key events
Continuous initiatives to ride out of the recession on top
Proposition
Financials
Lower space growth reflected in sales
Consistent sales and profit growth
Space
Space allocation
Sector performance – clothing
Market shares
Outlook
Makes headway as a clothing retailer
TJ Hughes
Attractive proposition helps drive sales
Recent key events
Woolworths demise is TJ Hughes’ gain
Proposition
Financials
Value proposition and fashion credentials boost sales
Profit grows, while operating margin stays level
Space
Refurbishment programme is rolled out as new space slows
Space allocation
Sector performance – clothing
Focus on menswear helps to drive clothing sales
Market shares
Outlook
Over expansion a risk
TK Maxx
Completion of UK expansion moves closer
Recent key events
Aggressive expansion plans shift focus to rest of Europe
Proposition
Financials
Downturn sustains growth
Sales remain strong
Space
UK space increase slows
Space allocation
Sector performance – clothing
Market shares
Outlook
Focus moves away from UK clothing
Appendix
Financial Statistics – VAT
Trading Profile
Key Operating Ratios
Physical Development
Abbreviations
Methodology
Further reading
Ask the analyst
Global Retail FreeView
Verdict consulting
Disclaimer

TABLE OF FIGURES
Figure 1: Clothing market growth vs value market growth 2000–10e
Figure 2: Value segment grows clothing market 2000–10e
Figure 3: Overall clothing inflation/deflation & volume growth 2000–09 and forecast to 2014e
Figure 4: Value clothing retailers share of clothing segments 2005 and 2010e
Figure 5: Value retailers clothing sales mix 2005 & 2010e
Figure 6: Value clothing specialists space and y–o–y change % 2005–10e
Figure 7: Value clothing specialists store numbers and y–o–y change % 2005–10e
Figure 8: Value clothing market shares 2005 and 2010e

Figure 9: Value winners & losers in clothing market share 2010e on 2009 40 Figure 10: Winners & losers in value clothing market share 2010e on 2009 40 Figure 11: Value clothing retailers UK operating margins 2004/05 and 2009/10 42 Figure 12: Value clothing retailers clothing sales density 2008/09 & 2009/10e 44 Figure 13: Value clothing retailers share vs midmarket and premium 2005 and 2010e 52 Figure 14: Value clothing segment growth vs clothing market growth 2005–11 52 Figure 15: Value market growth with and without Primark & Sainsbury 2005–10 53 Figure 16: Breakdown of gains in value segment 2010e on 2005 54 Figure 17: Impact of economy on value segment 2011 54 Figure 18: Inflation and volume growth in the clothing market 2004–14e 55 Figure 19: Sales densities and operating margins in the value segment 2009 56 Figure 20: Value segment retailer positioning 2011 57 Figure 21: Methods of minimising and disguising cost price increases for value retailers 2010 58 Figure 22: International presence of value clothing retailers 2010 60 Figure 23: Benefits and disadvantages of value clothing store formats 2011 62 Figure 24: Matalan's Christmas TV advert and Hollyoaks collaboration 2010 64 Figure 25: TK Maxx Christmas 2010 TV advert and Tesco S/S 2010 TV advert 65 Figure 26: Value market growth 2009–14 66 Figure 27: Asda, 2010 67 Figure 28: Charlie Allen menswear range, George website November 2010 69 Figure 29: Barbara Hulanicki collection, December 2010 70 Figure 30: Asda UK sales and growth to December 2005–10e 74 Figure 31: Asda UK operating profit to December 2004–09 75 Figure 32: Asda clothing space breakdown 2006–10 80 Figure 33: George at Asda clothing sales 2005e–10e 82 Figure 34: George at Asda clothing sales per sq ft 2005e–10e 83 Figure 35: George at Asda clothing and value clothing market shares 2005–10e 84 Figure 36: Matalan, 2010 88 Figure 37: Matalan retail sales and growth to February 2006–11e 92 Figure 38: Matalan operating profit to February 2005–10 93 Figure 39: Matalan clothing space breakdown 2006–10 96 Figure 40: Matalan clothing sales year end February 2006e–11e 98 Figure 41: Matalan clothing sales per sq ft to February 2006e–11e 99 Figure 42: Matalan clothing and value clothing market shares 2005–10e 100 Figure 43: New Look 102 Figure 44: Relaunched transactional website October 2010 103 Figure 45: Well segmented and desirable Limited Edition range, flagship store 2010 104 Figure 46: Spacious fitting rooms, flagship store 2010 105 Figure 47: Yes Yes denim range, Watford store October 2010 106 Figure 48: New Look UK sales and growth to March 2005–10 110 Figure 49: New Look group operating profit to March 2005–10 111 Figure 50: New Look clothing space breakdown 2006–10 116 Figure 51: New Look clothing sales to March 2005e–10e 118 Figure 52: New Look clothing sales per sq ft to March 2005e–10e 119 Figure 53: New Look clothing and value clothing market shares 2005–10e 120 Figure 54: Peacock Group Fascias – Peacocks & Bonmarché 123 Figure 55: Pearl & Daisy Lowe for Peacocks 2010 125 Figure 56: Peacocks website November 2010 126 Figure 57: Peacocks UK sales and growth to March 2005–10e 129 Figure 58: Peacocks group operating profit to year end March 2005–09 130 Figure 59: Peacocks clothing space breakdown 2006–10 133 Figure 60: Peacocks clothing sales to March 2005e–10e 135 Figure 61: Peacocks clothing sales per sq ft to March 2005e–10e 136 Figure 62: Peacocks value clothing market share 2005–10e 137 Figure 63: Bonmarché website November 2010 139 Figure 64: Bonmarché sales and growth to March 2005–10e 142 Figure 65: Bonmarché clothing sales to March 2005–10e 146 Figure 66: Bonmarché clothing sales per sq ft to March 2005e–10e 146 Figure 67: Bonmarché value clothing market share 2005–10e 147 Figure 68: Primark 2010 149 Figure 69: Primark mens formalwear range 2010 150 Figure 70: Primark UK retail sales and growth to September 2005–10e 153 Figure 71: Primark UK operating profit to year end September 2003–08 154 Figure 72: Primark group store numbers to September 2005–10 157 Figure 73: Primark space breakdown 2010 158 Figure 74: Primark clothing sales to September 2005e–10e 160 Figure 75: Primark clothing sales per sq ft to September 2005e–10e 161 Figure 76: Primark clothing and value clothing market shares 2005–10e 162 Figure 77: Sainsbury 2010 165 Figure 78: Sainsbury UK sales and growth to March 2005–10 170 Figure 79: Sainsbury operating profit to March 2005–10 171 Figure 80: Sainsbury clothing space breakdown 2007–10 174 Figure 81: Sainsbury clothing sales to March 2005–10e 176 Figure 82: Sainsbury clothing sales per sq ft to March 2005e–10e 177 Figure 83: Sainsbury clothing and value clothing market shares 2005–10e 178 Figure 84: Tesco, 2010 181 Figure 85: Tesco UK sales and growth to February 2005–10 187 Figure 86: Tesco group operating profit to February 2005–10 188 Figure 87: New clothing shopfit, Watford October 2010. 191 Figure 88: New clothing shopfit, Walkden store, 2010 192 Figure 89: New clothing shopfit, Walkden store, 2010 193 Figure 90: Tesco clothing space breakdown 2006–10 194 Figure 91: Tesco clothing sales to February 2005e–10e 196 Figure 92: Tesco clothing sales per sq ft to February 2005e–10e 197 Figure 93: Tesco clothing and value clothing market shares 2005–10e 198 Figure 94: TJ Hughes, 2010 202 Figure 95: TJ Hughes UK sales and growth to January 2005–10 207 Figure 96: TJ Hughes UK operating profit to January 2005–10 208 Figure 97: TJ Hughes space breakdown 2010 212 Figure 98: TJ Hughes clothing sales to January 2005e–10e 214 Figure 99: TJ Hughes clothing sales per sq ft to January 2005e–10e 215 Figure 100: TJ Hughes clothing and value clothing market shares 2005–10e 216 Figure 101: TK Maxx 2010 218 Figure 102: TK Maxx Gracechurch Street London 2010 220 Figure 103: TK Maxx retail sales and growth to January 2006–11e 224 Figure 104: TK Maxx operating profit to January 2005–09 225 Figure 105: TK Maxx menswear range Gracechurch Street, London 2010 228 Figure 106: TK Maxx womenswear range Gracechurch Street, London 2010 229 Figure 107: TK Maxx clothing space breakdown 2006–10 230 Figure 108: TK Maxx clothing sales to January 2006–11e 232 Figure 109: TK Maxx clothing sales per sq ft to January 2006e–11e 233 Figure 110: TK Maxx clothing and value clothing market shares 2005–10e 234 TABLE OF TABLES Table 1: Overall clothing trends 2001–11e 23 Table 2: Clothing sector trends 2001–11e 24 Table 3: Clothing channels of distribution 2009 and 2010e 25 Table 4: Value clothing market definition 2011 26 Table 5: Value clothing trends 2001–11e 26 Table 6: Value clothing channels of distribution 2009 and 2010e 30 Table 7: Clothing market shares 2005–10e 35 Table 8: Non specialists clothing market shares 2005–10e 36 Table 9: Value clothing market shares 2005-10e 37 Table 10: Value clothing retailers key UK operating statistics 2009/10 41 Table 11: Value clothing retailers clothing space allocation 2010 45 Table 12: Value clothing retailers womenswear space allocation 2010 46 Table 13: Value clothing retailers menswear space allocation 2010 47 Table 14: Value clothing retailers childrenswear space allocation 2010 48 Table 15: Value clothing retailers advertising media spend 2004–09 49 Table 16: Value clothing retailers advertising spend by media type 2009 50 Table 17: Asda company overview 2010 67 Table 18: Asda retail proposition 2010 72 Table 19: Asda UK key operating statistics 2005–10e 73 Table 20: Netto UK key operating statistics 2005–10e 73 Table 21: Asda UK trading record 2000–10e 76 Table 22: Netto UK trading record 1999–2009e 77 Table 23: Asda store portfolio 2000–10e 78 Table 24: Netto UK store portfolio 1999–2009e 79 Table 25: George at Asda clothing space allocation 2010 81 Table 26: Matalan company overview 2010 88 Table 27: Matalan retail proposition 2010 90 Table 28: Matalan key operating statistics 2006–11e 91 Table 29: Matalan trading record 2001–11e 94 Table 30: Matalan UK store portfolio 2001–2011e 95 Table 31: Matalan space allocation 2010 97 Table 32: New Look overview 2010 102 Table 33: New Look retail proposition 2010 108 Table 34: New Look key operating statistics 2005–10 109 Table 35: New Look trading record 2000–10 112 Table 36: New Look UK store portfolio 2000–10 114 Table 37: New Look store portfolio as at March 2009 and 2010 115 Table 38: New Look space allocation 2010 117 Table 39: Peacock Group overview 2010 123 Table 40: Peacocks retail proposition 2010 127 Table 41: Peacocks key operating statistics 2005–10e 128 Table 42: Peacocks trading record 2001–11e 131 Table 43: Peacocks UK store portfolio 2000–10e 132 Table 44: Peacocks space allocation 2010 134 Table 45: Bonmarché retail proposition 2010 140 Table 46: Bonmarché key operating statistics 2005–10e 141 Table 47: Bonmarché trading record 2001–11e 143 Table 48: Bonmarché UK store portfolio 2000–10e 144 Table 49: Bonmarché space allocation 2010 145 Table 50: Primark overview 2010 149 Table 51: Primark retail proposition 2010 152 Table 52: Primark key operating statistics 2005–10 153 Table 53: Primark trading record 2000–10e 155 Table 54: Primark UK store portfolio 2000–10e 156 Table 55: Primark space allocation 2010 159 Table 56: Sainsbury overview 2010 165 Table 57: Sainsbury retail proposition 2010 168 Table 58: Sainsbury key operating statistics 2005–10 169 Table 59: Sainsbury trading record 2000–10 172 Table 60: Sainsbury UK store portfolio 2000–10 173 Table 61: Sainsbury clothing space allocation 2010 175 Table 62: Tesco company overview 2010 181 Table 63: Tesco retail proposition 2010 184 Table 64: Tesco clothing sub brands November 2010 185 Table 65: Tesco key operating statistics 2005–10 186 Table 66: Tesco UK trading record 2000–2010 189 Table 67: Tesco UK store portfolio 2000–10 190 Table 68: Tesco clothing space allocation 2010 195 Table 69: TJ Hughes overview 2010 202 Table 70: TJ Hughes retail proposition 2010 205 Table 71: TJ Hughes key operating statistics 2006–11e 206 Table 72: TJ Hughes trading record 2001–11e 209 Table 73: TJ Hughes UK store portfolio 2000–10 210 Table 74: TJ Hughes additions to UK store portfolio 2009/10 and 2010/11e 211 Table 75: TJ Hughes space allocation 2010 213 Table 76: TK Maxx overview 2010 218 Table 77: TK Maxx retail proposition 2010 222 Table 78: TK Maxx key operating statistics 2006–11e 223 Table 79: TK Maxx trading record 2001–2011e 226 Table 80: TK Maxx UK store portfolio 2001–11e 227 Table 81: UK TK Maxx and Home Sense Stores 227 Table 82: TK Maxx space allocation 2010 231

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