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Retailing of Childrens Clothing in the United Kingdom

1001 words (4 pages) Essay in Marketing

5/12/16 Marketing Reference this

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The market for children’s clothing (aged from 0-15 years) is growing strongly in the United Kingdom (UK) (see Figure 1). Sales figures show that the children’s clothing market grew by 5% in 2002 compared with 2001, and there was a 10% growth in the two years from 2000-02.

Figure 1. Sales growth in the United Kingdom’s Children’s clothing market

Source: Mintel

Despite market growth retail competition is very intense. The market for children’s clothing is extremely demanding because it is highly segmented and complex. For babies, parents make the purchase decision, but once children begin to enter the age group where they can start to take decisions for themselves things change. Children become much more involved in the decision-making process about what they will wear and which brands they want. Moreover, they are unwilling to buy in a shop which sells clothes for babies and toddlers. Anecdotal evidence suggests that children as young as 5 or 6 are dictating the brands and styles that they want to wear. Young teenagers have a completely different outlook again. Generally, they are much more fashion conscious consumers, seeking out the right styles, brands and designs to build their self-image.

Industry’s key players

Generally, UK retailers attempt to serve two major parts of the children’s clothing market – the mass-market and specialised niches. In the mass-market for children’s clothing, retailers pursing a low-cost strategy have expanded faster than those retailers pursuing a broad-based differentiation strategy. UK retailers pursuing a low-cost strategy include the likes of Matalan, Asda and Tesco.

In particular, Asda and Tesco have significantly improved market share, through a combination of good styling of their clothes and low prices. Tesco is the UK’s biggest supermarket chain and Europe’s second largest retailer, while United States retailer Wal-Mart, the largest retailer in the world, owns Asda. The financial investment necessary to enter the market was low for such large operations. These large operations have comparable or greater purchasing power than all other participants in the industry as a whole. Another advantage for these firms is that they are already well-known to millions of UK consumers for their service and product quality. In addition, these stores possess other advantages such as their ability to attract large customer numbers due to their grocery operations and convenient free car parking.

Low-cost retailers have put considerable pressure on other mass-market retailers such as Marks & Spencer (M&S) and British Home Stores (Bhs). These retailers are major companies who sell a wide range of goods, not just clothing, through a wide network of stores in the UK. They are few in numbers and offer similar levels of quality and pricing. The likes of M&S and Bhs use a broad differentiation strategy based on strong branding, good quality clothes and price their goods around the industry average. In an attempt to keep their costs down they continually look around for the best and cheapest sources of supply. There are relatively few UK manufacturers of children’s clothing, so most arrive from overseas. Turkey, Eastern Europe and the Far East dominate the supply of children’s clothing to the UK.

One mass-market retailer who continues to perform strongly is Next. Next is one of the most profitable clothing companies in the United Kingdom and one of the country’s leading children’s clothing retailers. Next dominates not only the mass-market but the children’s clothing market taken as a whole. Next is regarded by many consumers as a trustworthy and reliable retail company. Despite higher than average industry prices in the mass-market, Next appeals to a wide customer audience, both better-off and price-sensitive customers, due to its strong reputation and the quality and styling of its clothing. The company has managed to segment its children’s clothing so older children are given significantly different styles and designs from the baby and toddler ranges. Next has also built strong relationships with suppliers and looks to replenish merchandise rapidly and efficiently. Despite facing intense competition from other stores Next is likely to remain the leading UK children’s clothing retailer for the foreseeable future.

At the premium end of the children’s clothing market independent retailers dominate. The more successful independent retailers specialise in selling the most desirable brand labels such as DKNY, Diesel, Burberry and Dior. They tend to focus exclusively on providing designer clothes for only one or two segments of the children’s clothing market e.g., babies, toddlers, pre-teens and young teenagers. The vast majority of independent retailers only operate one outlet, they are usually owner-operated, and focus on surpassing other retailers through personal service. Most are not necessarily right at the top end of the design scale but are relatively expensive compared

with mass-market children’s clothing. There are between approximately 3,000 and 3,500 independent children clothing retailers in the UK.

Being an independent retailer is not in itself a guarantee for success. Some independents attempt to serve too many segments in the children’s market and, therefore, struggle to create a clear identity. Some suppliers can also be quite dictatorial in their demands on independent retailers and often insist that they take a certain amount of stock from them. Due to these demands from suppliers, independents often run the danger of being over stocked with goods. This can mean that independents need to offer substantial discounts at the end of the season to clear old stock with a consequent drop in profitability.

Required:

Discuss the competitive conditions in the United Kingdom children’s clothing market.

(50 marks)

(b) What influence have cost-strategy retailers such as Matalan, Asda and Tesco had on other children’s clothing retailers in the United Kingdom market?

(20 marks)

(c) Discuss the importance of mission statements and objectives to the strategic planning process?

(30 marks)

Total 100 marks

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