A business analysis of British clothing retailing industry

Topics: Fashion, Clothing, Fashion week Pages: 25 (8007 words) Published: April 25, 2014

A business analysis of British clothing retailing industry

From Lili Yan B120715

1. Introduction
Clothing retailing industry is one of the most competitive industries in UK. Besides traditional clothing retailers, supermarkets (such as Tesco) and grocery retailers (such as M&S) also take participate in fighting for market share. Focusing on the general market development first, compared with the outstanding performance in 2010, in 2011, the clothing retailers faced a really tough time. With the end of more than a decade of deflation, the sector sales growth has slowed from 5.4% to 2.9% in the first half of 2011 (Mintel, 2011). And, in the short run, it can be predict the industry will suffer a challenge to maintain growth with the impact from several factors. The report will analyse the industry from two aspects: the environment analysis based on economic, political, socio-cultural, and technological aspects, and the 5 forces which shape the business strategy of clothing industry. Moreover, to illustrate the competition better, three clothing retailers belonging to high street fashion industry, which are Topshop, H&M and ZARA, will be selected for analysing the competition in the market. 2. External environment analysis (PEST)

2.1 Economic issues
2.1.1 Recession and austerity measure in UK
Nowadays, the economic development of UK is teetering on the edge of recession (Telegraph, 2011). According to the report from Niesr (The National Institute of Economic and Social Research), based on the facts of squeezed households income and tight credit conditions, UK will still entre in recession in the first half of the year (BBC, 2012). Besides, because of the problem of European sovereign debt, UK is hit heavily. For example, due to the collapse of the Greek economy, UK has loosed up to £336 billion (Shipman, 2011). Due to these issues above, UK suffered a slump in large external and fiscal deficits. In consequence, to avoid the aggravation of financial deficit, Conservative-Liberal Democrat coalition government implemented a series of austerity measures, including the biggest cuts in state, and raise the level of VAT from 17.5% to 20% in 2011 (BBC, 2010). The impact of the double blow should be analysed from two aspects including the shoppers and the clothing retailers themselves. General shoppers` attitude in the tough time

As the result of recession and austerity measures, the income is hurt in short terms, and the unemployment become higher in long terms; moreover, the rising VAT and relatively high inflation in these years lead to the high commodity prices and living cost. Thus, considering the shoppers` attitude to clothes in this tough time, there are several significant changes. First, in the latest 3 year (2009,2010,2011), the more adults, which are 22%, 39% and 51% of total number respectively, claim to be spending less than they used to on clothing (Mintel, 2009, 2010, 2011). Second, more adults become sensitive to price and prefer to buy the discounted or sale items to save money in 2011; actually, the figure of both were respectively 17% and 14% in 2010 (Mintel, 2010,2011). Third, it has been proved that shoppers become more intended to buy clothes with better quality. Thus, considering the fact that about 12% consumers would like to buy more local-made clothes, introducing ‘Made in the UK’ collections, which represent ‘high quality’, may be attractive for consumers (Mintel, 2011). Meanwhile, cheap clothes are also preferred (Mintel, 2011). Generally, attacked by these blows, consumer confidence is at low ebb, and this trend could be continued if the UK economy cannot come out from the woods (BBC News, 2012). The tough time especially for young people

The youths are facing the pressure from tuition fee at school and unemployment in society. On the one...
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