4 P's

Key note facts:

The decline of domestic production and the ultra-competitive retail environment means that retailers now dominate the apparel market. Key Note's consumer and corporate research identifies the leaders as Marks & Spencer, Arcadia Group, Next, Primark, New Look, ASDA, Tesco and Debenhams, each with its own strategic approach to the market (fast fashion, discounting, family, designer brands, etc.). However, to view these companies solely as retailers would be inaccurate, because they are `vertically integrated' businesses, handling their own design, commissioning of production, importing and marketing, as well as interfacing directly with the shopper, both in-store and online. A classic example of this vertical integration is C&J Clark (`Clarks'), the UK's largest footwear company: its manufacturing is now undertaken entirely abroad and it retails through its own multiple shoe-shop chain as well as selling its brand through concessions in other outlets.

One problem facing retailers in the industry is that many other outlets now sell footwear, and many clothing multiples and department stores have concessions for popular footwear brands. The plethora of brands — designer, youth, sports, industrial, outdoor, etc. — is a characteristic of the modern market, and some unusual brands have increased in popularity over recent years, such as Uggs (sheepskin boots), Crocs (artificial clog-type sandals) and Hunter (the ‘designer’ wellington boot).

In contrast to these innovations and fads, Clarks remains the UK’s largest footwear manufacturer by turnover. Clarks now operates globally — its footwear is no longer made in the UK — and recorded sales of £1.12bn in 2009. The company also leads on the high street, operating more than 500 outlets that sell its brand.

In the short term, the UK recession does not bode well for the footwear industry; however, footwear is essentially a saturated market that grows in line with consumer spending. Key Note forecasts...