Retail analysis of clothing sector
Retailers in the UK retail clothing sector had a tough fourth quarter (October-December) of 2013. Consumer confidence in clothing category reduced to 3 percent in the last quarter. However, this was an improvement on the larger fall of 7% in the third quarter. For first time in 12 months, UK shoppers became savvier with their budgets and cut back on clothing spend. Consumer confidence in clothing spend dipped 11% between October and December 2013, relative to 8% drop in the previous quarter (Russell 2014, p.1). The poor performance of the overall UK retail clothing sector was mainly as a result of weak wage growth that put immense pressure on households affected by decrease in real disposable income.
Having experienced overall lackluster sales during October and November, the retailers gave large promotions including a 30% discount by Marks & Spencer across its clothing lines in December, while Gap, Debenhams, Argos and BHS resorted to price cuts (Russell 2014, p.1). Christmas figures offered useful insights into spending patterns, showing that most hard-pressed consumers seemed to have intentionally delayed shopping of clothes in the hope of getting last-minute offers. Debenhams’ decision to request discount from its discounts few days to Christmas suggested that its profit margins had come under much pressure following heavy discounting and promotions by rival clothing specialists. Similarly, Mark & Spencer offered a 20% voucher offer a week before Christmas following discounts of up to 50 percent by Debenhams, H&M, New Look, and House of Fraser (Russell 2014, p.1).
Generally, most clothing retailers strived to win sales in the face of stiff competition from electronic good together with the dampening effect of mild weather. This made cardigans, sweaters and other warm clothing to pile in stores’ shelves due to lack of icy weather to inspire sales. It is hoped that an improving economy and lower economy would significantly bolster consumer spending in the clothing sector in 2014.
Reference:
Russell, M. 2014. UK: Consumer confidence returning on clothing spend. http://www.just-style.com/news/consumer-confidence-returning-on-clothing-spend_id120471.aspx.
