“Following several months of real-terms cutbacks in purchases from clothing specialists, consumers look to have taken the opportunity of Christmas 2011 to top up wardrobes through gift giving and personal treating. But such buying behaviours of cutbacks and occasional indulgence do not bode well for consistent, robust growth for the sector.”

See also: Clothing Retailing – UK – October 2011.

What we’ve seen in the UK Fashion Market

  • In 2011, clothing and footwear specialists recorded retail sales growth of 3.9%, down from 5.4% in 2010.
  • But positive inflation in the clothing category in 2011 underpinned this growth, and in real terms the clothing and footwear sector recorded growth of 1.2% in 2011, down from 5.5% in 2010. This was due, in part, to younger consumers cutting back from late 2010.
  • In real terms (i.e. stripping out inflation), consumers cut their purchases at clothing and footwear specialists for parts of 2011, but they returned to the sector periodically, including at Christmas 2011.
  • 2011 was therefore a year of peaks and troughs in the clothing and footwear sector as consumers sought either to cut back or treat themselves.

Clothing and footwear retail in 2011

Relative to 2010, growth in retail sales by clothing and footwear specialists weakened in 2011, but compared to the longer term, current-prices growth remained robust. Year-on-year growth of 4.7% in the clothing specialists sub-sector drove the 3.9% growth in the overall sector, taking the clothing and footwear sector to £37.03 billion in annual sales (excluding VAT). Of this, the clothing specialists sub-sector accounted for £33.13 billion (excl. VAT).

fashion sales1

But positive inflation in the clothing category – which emerged in 2010 after long-term deflation – underpinned this growth in current-prices terms. Annual average inflation in the clothing category stood at 3.2% for 2011.

<strong>graphic: image 2</strong>” /></a></p>
<p>In real terms, consumers continued to grow their spending on clothing and footwear but not at the same pace as inflation in the category. Stripping out the effects of inflation, growth for the sector stood at only 1.2% for 2011 as a whole, substantially lower than the real-terms growth seen in recent years. After sustaining spending on clothing through the recession, younger consumers finally began to cut their spending from late 2010 and this will have suppressed sector growth for much of 2011.</p>
<p><a title=<strong>graphic: image 3</strong>” /></a></p>
<p>Monthly data for real-terms year-on-year sales growth in 2011 showed volatility – especially in the smaller footwear specialists sub-sector. Unseasonably mild autumn weather impacted negatively on autumn/winter clothing sales – but that only marked the nadir following a slowdown in growth from the spring. The annual figure, above, thus conceals periods of cutbacks in consumer purchases from clothing retailers, with intermittent peaks.</p>
<p>Christmas 2011 was a particularly strong one for the clothing and footwear sector with real-terms year-on-year growth of +8.2% and current-prices growth of +10.4%. Following several months of curtailed purchases, consumers look to have seized the opportunity of the holiday to top up wardrobes through gift giving and personal treating. This was also reflected in the associated mixed goods/department store sector, which recorded real-terms sales growth of +7.9% in December 2011.</p>
<p><a title=<strong>graphic: image 4</strong>” /></a></p>
<p>However, this buying behaviour – months of cutbacks followed by occasional indulgence – does not bode well for consistent strong growth in the clothing and footwear sector.</p>
<p>In current-prices terms, Mintel currently forecasts sales growth of 2.4% for the clothing and footwear specialists sector in 2012.</p>
<h2>Mintel’s Consumer Tracker</h2>
<p>Despite the weak economic recovery, consumers have shown an increased willingness to spend on personal adornment including clothing and beauty products, year-on-year. At the same time, consumers are telling us that they are spending more on leisure experiences. Consumers look to be financing these purchases through cut-backs in bigger-ticket expenditure such as electrical goods and small reductions in saving money.</p>
<p>Mintel’s consumer data confirms that for Christmas 2011, spending on personal adornment, including clothing, was increasingly important for consumers.</p>
<p>Figure 5: MINTEL TRACKER SURVEY: AGREEMENT WITH STATEMENTS ON WHAT EXTRA MONEY IS SPENT ON, DEC 2009, DEC 2010, DEC 2011</p>
<p>Base: 2,000 internet users 16+</p>
<table>
<tr class=  

 

 

 

 

Dec-09 

 Dec-10

Dec-11 

% point change 

Jewellery/clothing/personal items

15.1

17.8

19.2

+1.4

Fragrances/toiletries/make up

10.0

11.1

13.7

+2.6

Dining out

35.3

34.5

36.0

+1.5

Days out (eg leisure park)

12.3

15.8

18.1

+2.3

Going out (eg pub, cinema etc)

33.4

33.0

36.1

+3.1

Home electronics/home entertainment systems

10.2

10.9

9.5

-1.4

Savings account/emergency/rainy day fund

31.3

33.1

32.7

-0.4

I never have any extra money

11.2

13.4

14.1

+0.7

Source: GMI/MINTEL

Inflation: cotton prices ease

The clothing category moved from long-standing deflation to positive year-on-year inflation in consumer prices in September 2010, with the rising price of cotton a key contributor to this. The 2.5 percentage point increase in the standard rate of VAT in January 2011 contributed further to positive inflation. Clothing inflation eased in late 2011, from 4.7% in October to 2.4% in December, but increased again in January to 3.3%.

Cotton prices, which underpinned rising inflation in the clothing and footwear category, peaked in March 2011 and have slumped since then. At January 2012, average monthly prices were down 43.5% year-on-year.

Figure 6: YEAR-ON YEAR CHANGE IN AVERAGE MONTHLY COTTON PRICES, “A” INDEX, JAN 2011 – JAN 2012

<strong>graphic: image 5</strong>” /></a></p>
<p>Source: NATIONAL COTTON COUNCIL OF AMERICA/MINTEL</p>
<p>Given the annualisation of the 2011 VAT increase and falling cotton prices we expect inflation in clothing to subside considerably in 2012 and it is certainly possible that deflation will return to the category, easing the pressure on consumers. That said, consumers will continue to be squeezed by high rates of inflation in other categories, particularly automotive fuel.</p>
<h2>What this means for Fashion sales 2012</h2>
<ul>
<li>Positive consumer prices inflation in clothing buoyed total retail sales for the clothing and footwear sector in 2011. Stripping out inflation, consumers continued to increase their purchasing year-on-year, but at a much lower rate than in the recent past.</li>
<li>Retail sales for the clothing and footwear sector tended to grow towards the end of 2011 and into January 2012. Christmas 2011 was a particularly strong one for the clothing and footwear specialists, with real-terms growth of 8.2% . Willingness for consumers to spend on personal adornment was also reflected in 7.9% real-terms growth in the mixed goods/department store sector in December 2011.</li>
<li>Following several months of cutbacks in purchases fom the clothing retail sector, consumers look to have taken the opportunity of Christmas to top up wardrobes through gift giving and personal treating. But such buying behaviours of cutbacks and occasional indulgence do not bode well for consistent, robust growth for the sector.</li>
<li>One positive indicator is deflation in cotton prices in late 2011 and early 2012 following substantial rises in 2010 and early 2011 – potentially easing some of the pressure on consumers.</li>
</ul>
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