The UK clothing and footwear market will suffer slower growth between 2005 and 2007 following one of the worst Christmas and New Year periods for many years, according to a new report.

The report, Clothing and Footwear Industry Market Review 2005, said that the market experienced strong growth at the start of 2005, but that this will take a downturn in the near future.

Clothing and footwear sales have exceeded general market trends recently because of a variety of factors such as more women working full-time who need wider clothing choices, the trend towards 'dressing down' at work, which has paradoxically made people spend more on casual garments than they would need to spend on conventional formal clothing for the workplace, and a growing desire to wear designer brands.

Growth has been achieved in spite of declining prices. Between 2000 and 2004, average prices across the clothing and footwear market fell by an estimated 11.5%, and prices for some items of women's wear (the most competitive market segment) fell by almost 20%.

This is essentially the result of globalised sourcing, the report said. The UK has had high import ratios in both clothing and footwear for many years, and imports will probably account for over 95% of the total market by the end of 2005.

The best opportunities for British manufacturers lie in high-quality or technical clothing and footwear, and exports of these items are still valuable to the economy.

Total UK exports of clothing and footwear came to GBP3.11bn in 2004, while imports were GBP13.13bn, resulting in a trade deficit of GBP10.02bn.

Despite estimates of a slow down in growth, the report said the market should expect some recovery in the second half of the forecast period, owing to the generally favourable consumer attitudes towards clothing and footwear, including a growing demand for quality and well-known brands from adults and, increasingly, from children and teenagers.

The market will continue to polarise between discount retailers and outlets specialising in premium-priced designer clothing, putting further pressure on mid-market retailers such as Marks & Spencer. However, the greatest threat to established clothing retailers will come from the grocery superstores, which are taking an increasing share of clothing sales and are even planning to open chains of non-food stores selling clothing.