Value Clothing in European Retail

Published by: Verdict Research Ltd

Published: Sep. 24, 2009 - 146 Pages

Table of Contents

Executive Summary

It is recession boom time for European value clothing retailers,

Consumers trading down as a reaction to the recession means that every retail proposition with a strong and deep value focus should do well.

Value is a growing segment in a declining sector, as overall clothing volumes are down.

However in recessionary times the value players will have to contend with strong discounting from middle market players

As Tesco’s halo has slipped somewhat in the recession, Ireland’s Primark is set to take up the torch of sharpest and most feared retailer from the British Isles.

The fashionability and the focus on a young demographic are perhaps Primark’s unique selling points and something much of the competition obviously lacks - with perhaps the exception of H&M.

The harsh lesson UK fashion multiples had to learn in recent years stands to be repeated across the continent.

Indeed C&A’s capitulation of its Avanti fascia makes us unsure about the retailer’s future prospects altogether,

As such the race between ABF’s Primark and C&A’s Avanti to conquer the European value clothing market has come to a premature conclusion.

Kik and Takko look the most interesting competitors to Primark for the young value fashion crown

H&M need to focus on l-f-l growth.

TKMaxx is a class apart, as it operates a different business model without a dedicated private label line.

That said, Primark and the value fashion retailers in general need to focus their efforts on ethical issues as clothing retailing in consumers’ perception has become holistic.

For the value players strategic decisions need to be made about store locations, and management will have to choose between offensive and defensive tactics in terms of expansion abroad also.

Another key decision will have to be taken about foreign expansion.

Now is the time to grow and the value clothing specialists should not sit idly by while the hypermarkets and grocery discounters battle it out amongst themselves at the value end of the market.

Clothing Market Structure

First major fall in a decade in EU27 clothing expenditure

Specialists sales follow downward trend

Specialists space growth stagnates

Pressure on sales densities builds

Store numbers continue long term decline

Average sales per specialist clothing store in EU about to reach €500,000 …

... while specialist clothing store average sizes spanned 156sq m range in 2008

Strategic Issues

Economic picture - GDP crawls back up

Euro interest rate remains at historic lows

No sign of inflation yet

Unemployment time bomb

Massive opportunity for EU value players

Internationalisation and emergence of pan-European value clothing retailers

Diverse strategies stretch value model

Migration online and multichannel development

Non-specialists - from Aldi to Tesco - threaten specialist value players

Discounting - more competition on low cost front

Ethical concerns and the environmental implications of throwaway fashion

France

Potential for value chains to grow and consolidate

Recent key events

Outlook - value chains will expand long term regardless of midmarket discounts

Germany

Value clothing sales grow robustly

Recent key events

Outlook - competition in value clothing will increase

Kik and Takko expand in town centers and shopping malls

Italy

Discretionary cutbacks

Recent key events

Outlook - expect more M&A activity post-recession

Spain

Severe economic downturn takes toll

Recent key events

Outlook - fast fashion value (like Primark) appeals to Spaniards in financial tough times

UK

Value clothing well established and highly competitive

Recent key events

Outlook - low cost operators with scale will prevail

Company Comparisons

Sales

Value positioning

Stores

Sales densities slip

C&A

Shuts down Avanti value fast fashion format in Germany and Poland

Recent key events

Financials

Stores

Outlook - C&A format needs continual development for mature markets

H&M

Global fashion retailer

Recent key events

Financials

Stores

Outlook - closes on Inditex by targeting new customer groups

Kiabi

France’s leading value clothing retailer focuses on Europe

Recent key events

Financials

Stores

Outlook - a serious threat to C&A and Primark?

New Look

Develops beyond EU through franchises

Recent key events

Financials

Stores

Outlook - under pressure from weak sterling

Primark

Density towers over rivals

Recent key events

Financials

Stores

Outlook - needs to manage ethical stance more proactively

TK Maxx

Flight to value plays into TK Maxx’ hands

Recent key events

Financials

Stores

Outlook - now is the time to break into Europe

APPENDIX

Definitions

Glossary

Abbreviations

Financial statistics - VAT

Source - Verdict Research

Verdict Research consulting

Disclaimer

LIST OF FIGURES

Figure 1: EU27 clothing expenditure per capita 2008e

Figure 2: EU27 clothing specialists sales density estimates in € per sq m 2008e

Figure 3: EU27 sales per specialist clothing store in €000 2008e

Figure 4: EU27 specialist clothing store average size (sq m) 2008

Figure 5: ECB interest rates 2006-2009

Figure 6: EU value clothing market 2008

Figure 7: Value clothing retailers pan-European presence 2009

Figure 8: Kiabi, Russia 2009

Figure 9: Takko, Bratislava, Slovakia 2009

Figure 10: Internationalisation of clothing retailers 2009

Figure 11: Economics of moda low cost 2009

Figure 12: Sainsbury’s TU clothing 2009

Figure 13: Midmarket clothing retailers discounting in Europe, spring 2009

Figure 14: European value clothing retailers environmental initiatives 2009

Figure 15: European value clothing retailers labour and production initiatives 2009

Figure 16: French clothing expenditure and value retailers sales 2003-2008

Figure 17: C&A, Calais, France 2008

Figure 18: La Halle new store layout, Maurepas France 2009 - emphasis on the price

Figure 19: La Halle new store layout, Maurepas France 2009 - large signage emphasizng the price

Figure 20: Pimkie, Calais, France 2008

Figure 21: German clothing expenditure and value retailers sales 2003-2008

Figure 22: Kik, Düsseldorf 2007

Figure 23: Takko, 2009

Figure 24: Italian clothing expenditure and value retailers sales 2003-2008

Figure 25: OVSindustry new concept store, Mestre C.C. Le Barche 2009

Figure 26: OVSindustry new instore layout, Mestre C.C. Le Barche 2009

Figure 27: Spanish clothing expenditure and value retailers sales 2003-2008

Figure 28: Koodza, Olias del Rey, Spain 2009

Figure 29: UK clothing expenditure and value retailers sales 2003-2008

Figure 30: Leading European value clothing retailers by positioning and countries 2009

Figure 31: Leading European value clothing retailers sales densities 2007/08 and 2008/09

Figure 32: Yessica, C&A, Rotterdam, NL 2009

Figure 33: C&A, Geneva, Switzerland 2009

Figure 34: H&M, Prague, Czech Republic 2009

LIST OF TABLES

Table 1: EU clothing expenditure (€m) by country 2003-2008

Table 2: EU clothing expenditure growth rates by country 2003-2008e

Table 3: EU27 clothing expenditure ranking matrix 2008

Table 4: Sales through specialist clothing retailers of EU27 2003-2008e

Table 5: Clothing specialists sales growth rates by country EU27 2003-2008e

Table 6: EU27 clothing specialists sales ranking matrix 2008

Table 7: Clothing specialists selling space (000 sq m) estimates by country 2003-2008e

Table 8: Clothing specialists space growth by country 2003-2008e

Table 9: EU27 clothing specialists selling space ranking matrix 2008

Table 10: EU27 clothing specialists store numbers estimates by country 2003-2008

Table 11: EU27 clothing specialists estimated store numbers by country 2003-2008

Table 12: EU27 clothing specialists store numbers ranking matrix 2008

Table 13: Latest GDP data August 2009

Table 14: Monthly HICP rates y-o-y Jan-Jul 2009

Table 15: Monthly unemployment rates y-o-y Jan 2009-Jun 2009

Table 16: Value clothing market definition 2009

Table 17: A selection of European value clothing retailers EU27 store portfolios - summer 2009

Table 18: French clothing expenditure and value retailers sales 2003-2008

Table 19: German clothing expenditure and value retailers sales 2003-2008

Table 20: Italian clothing expenditure and value retailers sales 2003-2008

Table 21: Spanish clothing expenditure and value retailers sales 2003-2008

Table 22: UK clothing expenditure and value retailers sales 2003-2008

Table 23: Leading European value clothing retailers sales (ex VAT) 2008/09

Table 24: Leading European value clothing retailers stores and space 2008/09

Table 25: C&A company overview 2009

Table 26: C&A benchmarks in EU27 year ended February 2008 and 2009

Table 27: C&A trading record 2004-2009

Table 28: C&A EU trading record by country 2007/08 and 2008/09

Table 29: C&A European store portfolio February 2009

Table 30: H&M company overview 2009

Table 31: H&M benchmarks in EU27 year ended November 2007 and 2008

Table 32: H&M trading record (SEKm) 2004-2008

Table 33: H&M trading record (€m) 2004-2008

Table 34: H&M sales by country (SEKm) 2007 and 2008

Table 35: H&M net sales by country (€m) 2007 and 2008

Table 36: H&M store portfolio 2007 and 2008

Table 37: Kiabi company overview 2009

Table 38: Kiabi benchmarks year ended December 2007 and 2008

Table 39: Kiabi trading record 2003-2008

Table 40: Kiabi store portfolio 2002-2008

Table 41: Kiabi store portfolio country split Dec 2008 and April 2009

Table 42: New Look company overview 2009

Table 43: New Look benchmarks (EU only) year ended March 2008 and 2009

Table 44: New Look Group trading record 2004-2009

Table 45: New Look Group sales changes % by country 2004-2009

Table 46: New Look Group trading record by country 2004-2009

Table 47: New Look group store portfolio 2007-2009

Table 48: New Look sales area by country (000 sq m) 2007-2009

Table 49: Primark company overview 2008

Table 50: Primark benchmarks years 2007-2008

Table 51: Primark EU trading record (£) 03-2008

Table 52: Primark EU trading record (€) 2003-2008

Table 53: Primark UK trading record 1999-2009e

Table 54: Primark UK trading record 2002-2008 in €

Table 55: Primark store portfolio as at March 2008 and June 2009

Table 56: Primark selling space provision 2008 and 2009

Table 57: Primark UK store portfolio 1999-2009e

Table 58: TK Maxx company overview 2009

Table 59: TK Maxx benchmarks in EU year ended January 2008 and 2009

Table 60: TK Maxx EU trading record year to January 2004-2009

Table 61: TK Maxx EU trading record by country 2006/07-2008/09

Table 62: TK Maxx store portfolio 2004-2009

Abstract

• Proprietary data on market value, specialists sales and growth 2003 - 2008 data for each of the 27 EU countries.
• Key data on total expenditure, selling space, store numbers, sales densities and per capita expenditure for each of the 27 EU countries.
• Comprehensive profiles of C&A, H&M, Kiabi, New Look, Primark and TK Maxx with a detailed analysis of core strengths and weaknesses and future outlook
• Detailed chapters on five core European clothing markets, with analysis of leading value players, recent developments and future outlook.

• Identify the key trends and issues in clothing retail in Europe and design strategies to exploit opportunities and minimise risk.
• Assess market potential and threats by accessing sector size data and seeing how consumers and retailers have reacted to recent economic turbulence.
• Comprehensive profiles provide essential information on business models and performance measures both crucial for benchmarking businesses.

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