Luxury retailers driving high street growth

UK: Luxury retailers driving high street growth – research

By just-style.com | 29 February 2008

Luxury and premium retail operators will continue to drive growth in the UK high street during 2008, according to a new report from Verdict Research.

The company, part of the Datamonitor group, believes luxury retailers like Harrods, Selfridges and Harvey Nichols will continue to outpace the overall department store market, as they have for the past six years.

The sector suffered in 2004 and 2005 thanks the the poor performance of market leader Marks & Spencer and the downfall of Allders, but returned to growth in 2006 and 2007.

Now, despite the recent economic downturn, Verdict is forecasting a third consecutive year of growth in 2008.

The researcher is predicting overall department store growth of 4.1% over the year, with luxury and premium operators enjoying 6.7% growth, and the rest of the sector 3.8% growth.

However, that represents a notable slowdown from last year's luxury/premium growth figure of 11.3%, but a an improvement for the rest of the sector, which experienced growth of just 2.7% last year.

Among the top ten department store retailers, Harrods has shown the biggest improvement in operating profit per square foot of retail space - GBP30 (US$59.50) between 2005/6 and 2006/7, followed by Selfridges at GBP16.

"These retailers are creating a virtuous circle by investing in their stores and ensuring the store experience matches the aspirational status of the brands they stock," said Maureen Hinton, lead retail analyst at Verdict.

Meanwhile, improved performance from John Lewis has seen the store grow its market share from 16.8% in 2002 to 19.1% last year, widening the gap with Debenhams and closing in on Marks & Spencer.

Sectors: Retail

Companies: Verdict Research, Datamonitor, Marks & Spencer, John Lewis, Debenhams