In the money: Value clothing retailers defy downturn
Say what you like about Primark, but the "bargain basement" or "throwaway fashion" concept is working well during a time of crisis for many retailers. Joe Ayling reports on how the downturn has given rise to a shopper more concerned with prices than labels, and why the value retail sector could shape the high street for years to come.
Many value clothing retailers are defying the downturn by selling cheap garments to consumers on a tight budget, as those around them post losses and fall into difficulties.
They are helped by shoppers who can't afford to be picky when faced with rising unemployment and tighter credit conditions, and are shying away from designer T-shirts, jeans and dresses sold in department stores.
Furthermore, industry experts believe value retailers like Primark are more than a temporary beneficiary of the credit crisis, and could be shaping the high street for years to come.
Ken Watson, managing director of Industry Forum Services, tells just-style: "I don't think that many consumers think of value retailers as throwaway fashion. This is great fashion and it's cheap. The cost of clothing has come down over time and people are buying more of it from retailers like Primark.
"Accordingly, when the economy recovers and demand returns it certainly won't mean that value fashion chains like Primark will suddenly lose their edge."
Purple patch for Primark
Verdict Research believes the value clothing sector took up nearly a quarter of the total UK clothing market last year, up from 10.7% a decade ago.
In addition to these chains, supermarkets Tesco, Asda and Sainsbury's also sell garments at rock bottom prices with varying success. Primark is marginally ahead of Asda's George in leading the UK's value clothing sector.
However, Verdict's lead retail analyst Maureen Hinton tells just-style that the success of value clothing retailers is not borne entirely out of the recession.
She says: "The downturn has been an influence, and the two main winners have been New Look and Primark. Both also sell to young consumers too, who are less exposed to the economy than older ones.
"It is not all to do with the economy though. It helps to a certain extent, but it is more to do with the positioning and fashion credentials of a store.
"The main consumer trend is that people are being more selective about what they buy. Brands can still do very well, but it depends more on the product than the brand."
A spokesperson for Primark agrees with Hinton, telling just-style: "Primark has generally done well in both good times and bad.
"There has been a profound shift in consumer behaviour towards value retailers, which continues to be seen. But this shift is taking place irrespective of the ups and downs of the economy at any given point.
"I don't think it is a given at all that a recovery in the economy will favour more expensive retailers either, because the value and quality of our clothing remain most important to us."
Value competition heats up
The latest sign of strength in the value clothing sector came last week when New Look reported a 10% rise in earnings for fiscal 2009.
The company, which opened 27 international stores in the period, says it will continue outperforming the market by combining "great fashion and great value."
Interestingly, New Look is seeing a three-fold annual increase in the number of visits to its e-commerce site since last year too, in a sector that does not traditionally lend itself to online retailing. Primark, for instance, does not even have an e-commerce site yet.
The emergence of chains like New Look mean that supermarkets are under pressure to make sure their clothing is fashionable, and not merely convenient.
Verdict says grocers "must ensure clothing is innovative and of good quality and well designed and presented, to ensure success in the future."
In the US, discount chains Target and Wal-Mart have cornered the value fashion market. However, specialist clothing retailers like Aeropostale and The Buckle are bucking the trend in a generally negative US retail environment with their cheap fashion offering.
Therefore, while the value clothing sector continues to take great strides as a whole, competition within the sector is growing accordingly.
The popularity and value of Primark with the masses seems to have overshadowed some of the bad publicity it has received from TV shows like 'Blood, Sweat and T-shirts' on the BBC.
Hinton says: "The main problem is the media perception that if you are cheap you must also be exploitive, but retailers are often sourcing from the same factories."
As long as Primark continues to defend its ethical ground, the company is likely to go from strength to strength post-recession.
In the meantime, value retailers are well insulated from tightened belts by selling cheap ones.
By Joe Ayling, news editor.
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