Analysis of a Sector of the UK Fashion Market - Case Study Example

Running head: REPORT OF A SECTOR OF THE UK FASHION MARKET Report of a Sector of the UK Fashion Market [Writer’s name] [Institution’s name] Executive Summary The report will give a complete overview of the situation on the fashion industry in UK. Since the fashion industry has always been a fast moving industry, the factors and risks affecting it have always changed with time. A contingency plan has always been required for the players in this industry. The report is based on evaluation of the responses of a key player to the PEST factors of the sector in the fashion industry in UK. The Footwear market is inextricably linked to the clothing market. Analysts usually group both industries for the evaluation Clarks foot wear has been used. Clarks is a well known brand name in the fashion industry. Pest analysis is carried out to further analysis the fashion industry of UK. A contingency plan is also designed so that the risks facing the industry can be tackled. The plan is based on the threats portrayed in PEST analysis. The plan is divided into three terms short term , mid term and long term. Report of a Sector of the UK Fashion Market Introduction The fashion industry is a fast moving industry it has always needed a through analysis. UK has a very competitive fashion industry. All it’s sectors usually require contingency or risk assessment plans. This report is based on the situation analysis of the fashion industry and the Pest analysis of Clarks foot wear. Apart from this the report shall also include A contingency plan is also designed so that the risks facing the industry can be tackled. The plan is based on the threats portrayed in PEST analysis. The plan is divided into three terms short term, mid term and long term. Situation Analysis The Footwear market is inextricably linked to the clothing market. Analysts usually group both industries. Past In the past the shoe market was no very competitive people were not very interested in buying shoes. In 2005 the average person spent around £4.60 per week on shoes (source: Family spending). Thirty to forty nine year olds were spending on average £6.20 (£322 per annum) a week on shoes because they were buying for their children (Li 2010). Present According to the Office of National Statistics (2010) in UK the footwear industry accounts for 13.7% (£6bn). According to the above mentioned source the industry in 2101 also experienced a 6.2% increase in value and 7.2 in volume, as compared to earlier in the year it has improved and is perfuming better then other segment of the fashion industry . . Clarks is the leader in the industry it’s largest competitor is Stylo PLC. This has 650 stores, trading mainly as Barratts, Bacons, Priceless and Shelly’s. Other significant names in the industry are R Griggs Group, famous for its Doc Martins Boots. Griggs is privately owned and sells throughout the UK in many major outlets Stead & Simpson Ltd., which has over 400 outlets. They trade under the names of Peter Briggs, Stead & Simpson, Shoe Express and Lilley & Skinner and Shoe Zone, which has 370 locations in the UK (Weighman 2009). More recently new competitors have emerged particularly some of the major Supermarket chains such as Asda, who have their own clothing and shoe range. Other fashion outlets have also recently diversified into the footwear industry, e.g. ‘Arcadia’ which now sell its “own brand” shoes as well as known brands. ‘Oasis’, ‘Next’ and ‘New Look’ are also taking the same direction (Weighman 2009). The Internet has also increased competition from other parts of the world although this is not at present material. Future From the research taken from different sources , it has become evident that fashion in the footwear industry is becoming important and consumers are becoming more fashion conscious when it comes to their feet. However trends change rapidly and it is difficult to forecast where the market is going. Predicting the trend correctly is the difference between success and failure. However when it is confronted weak comparatives it is predicted that footwear market in 2010 may grow quite fast. However the growth will only be of a 1.9% and boosted by price rises. It may also be predicted that consumer confidence to recover, the risk of higher taxes, weak wage growth as well as the likelihood of more job cuts may play an important role in consumers becoming extra careful with purchases (Li 2010). The majority of footwear sales in the UK are through retailers. A third of women admit to buying shoes and accessories on impulse (Diamond 2005). Only a small number of people buy over the Internet. Parents tend to take their children to recognised retailers to have their feet properly measured (Weighman 2009). Parents insist on buying the right shoe for their children (Weighman 2009).. On the other hand teenagers will tend to go purchase from the fashion stores. Macro Environment Pest Political There are a number of political factors which impact Clarks’ business. The EU has voted to impose a two year regime of tariffs on imported goods from China and Vietnam. The duties will come into force in early January and range from 9.7pc to 16.5pc for China and 10pc for Vietnam (The Telegraph 2009). This will mean higher importing cost for Clarks which could put up prices. The European Commission also imposes rules re price fixing and protecting small suppliers against anti competitive behaviour from the large operators. (Neal 2007) Economical Current Economic factors are beginning to have an impact on the footwear market. Whilst interest rates are now beginning to reduce in the UK after two years of increases, there is concern that the economy will move into recession. According to the Bank of England (2010), The Bank of England’s base rate is still at 0.5% Families are finding that there is a greater pressure on their budgets, so they are tending to buy fewer luxuries such as shoes. The “credit crunch” i.e. availability of debt and at what price, has also slowed down consumer spending, and will do so further in the future (Whitehouse 2009). According to Reuters (2010) Euro is up1.3 pct more then sterling, this will impact the cost of imports from EU countries. The Bank of England confirmed that households are being hit as the effect of the global credit crunch spills over into the real economy ( Cable 2009 ) There is a tightening of both consumer and business spending, and it is expected to deteriorate over the next few months. Social Social factors have affected the footwear marketplace such as dress codes. According to Solomon (2009) the 21st century is a period of fast changing fashion; for example under 35 year olds choose to replace their shoes with the newest and most fashionable pairs , rather than repairing their shoes or buying shoes that will last for years . This is partly due to the fall in price of shoes recently enabling young people to be more fashionable. Such has been the interest in fashion amongst young and middle aged people that inadvertently, it has created enthusiasm in shoes (Noel 2009). Technological There have been a number of technological changes which have affected the market. There is now the ability to mass produce shoes from a combination of natural and synthetic materials at low cost and to relatively high quality standards (Hines & Brue 2006). The use of the Internet has meant that customers have a wider choice of where to buy their shoes from. There is evidence to support growth buying “on line” as it fits in with people’s busy lifestyle. Contingency plan Short Term (1-3 Years) As discussed in earlier increasing the product range is a good way of increasing revenue and profitability. People may come to Clarks for more than just shoes. It may be noted that some of the competition are starting to introduce different product into their shoe shops (Jackson 2008). Clarks will want to be the market leader and be the first to properly diversify into a different market. First mover initiative will consolidate the company’s market dominance. It is strongly suggested to consider this part of the plan. Medium Term (3-5 Years) Most appropriate target market would be 39-40 year olds as they spend a lot on shoes. It would be a good move if this market is considered (Weighman 2009). The advantage of being the top player in this market may be an important for Clarks. As they will be able to earn a good profit as well as become a well known name in the before mentioned target market. Long Term (5 +Years) It should have a significant market move towards lower cost higher fashion shoes in the teenage/young adult sector of the market (Weighman & Bruce 2006). From the above analysis it may concluded that that more young people are buying shoes and are becoming a larger force in the shoe market(Jackson 2008). If Clarks does not keep up with the latest trends, Clarks may lose its dominant position. Consumers’ attitudes to footwear are changing as outlined earlier. Conclusion To conclude it may be said that the fashion industry of UK is an extremely competitive market. Especially the shoe sector as it is the footwear market is inextricably linked to the clothing market. It the past it has always risen to great heights. By the above analysis it may be said that it Clarks wants to be successful in the shoe market it must follow the contingency plan. The contingency plan is prefect set of recommendations which may help Clarks to be the top leader in the market References Bank of England (2010). Bank of England. Retrieved from http://www.bankofengland.co.uk/ on 18 November 2010 Cable Vincent (2009). The Storm: The World Economic Crisis and What it Means Atlantic Books; First Edition Diamond E. (2005)."Fashion Retailing: A Multi-Channel Approach", Prentice Hall Hines T. & Bruce M. (2006). Fashion Marketing: Contemporary Issues. Butterworth-Heinemann Jackson Tim (2008). Mastering Fashion Marketing. Palgrave Macmillan Li Andrina (2010). Recession: The Impact in the UK Middle Market Fashion Industry. VDM Verlag Dr. Müller Neal Larry (2007). The Economics of Europe and the European Union. Cambridge University Press Noel Hayden (2009). Basics Marketing: Consumer Behaviour. AVA Publishing Office of National Statistics (2010).Shoe fashion that fits me. Foot ware magazine. Retrieved from http://62.128.151.219/A1ok07/FootwearAugust2010/resources/6.htm on 18 November 2010 Reuter (2010). Sterling loses ground against euro on disappointing econ data. Retrieved from www.reuters.com/article/idUSLDE6821H52010090 on 18 November 2010 Solomon R. Michael (2009). Consumer Behaviour: A European Perspective. Financial Times Prentice Hall Telegraph (2009). EU extends import duties on Asian footwear. Retrieved from www.telegraph.co.uk/.../EU-extends-import-duties-on-Asian-footwear on 18 November 2010 Weighman, C. (2009). An Investigation into Marketing Strategies and their Relationship with Design Management in the Fashion Industry, University of Salford BA (Hons) Degree, Design Management 2 Report, Manchester, England Whitehouse Maggi (2009), From Credit Crunch to Pure Prosperity. O Books Read More