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Monday, 21 August, 2000, 09:50 GMT 10:50 UK
Tough time for clothes retailers
Supermarket aisle
More supermarkets will start to sell clothes
Times are set to get even harder for clothing retailers, a report suggests.

More and more consumers are deciding to spend their money on home-related products instead of clothes, the report from Verdict said.

While discount chains such as Matalan and Primark will continue to do well, it is middle-market retailers that will face the most pressure.

"People have plenty of money but prefer to spend it on home-related products...Anyone anticipating easier and brighter horizons over the next five years will be greatly disappointed, as it is set to be the most difficult trading climate for decades," the report said.

Discounters, which in the past year had a 6% share of the clothing market, will have a 10.3% share of this market by 2005.

Already, middle market players such as Marks & Spencers, Bhs, Littlewoods and Arcadia are cutting prices to keep customers.

"Consumers are merciless in their desertion of those who fail to meet their expectations. Loyalty has declined significantly - hence the rise of discounters and the fall of Marks & Spencers", the report added.

Supermarket competition

Clothes retailers will also face competition from supermarkets which are trying to make inroads into their market.

The most successful of these are likely to be Asda - owned by US giant Wal-Mart - and Tesco.

Supermarkets are expected to have a 7.5% share of the market in 2005, compared with a current share of 4.4%.

C&A's decision to stop doing business in the UK is also likely to increase pressure in the market.

Estimates are that the C&A floorspace generated 500m worth of sales.

If new names such as Gap or Next move into these empty stores, they are likely to hope for 850m worth of sales.

"Against the background of largely stagnant demand, this will have to be captured from somewhere and this spells more bad news for the already pressurised middle market," the report said.

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See also:

13 Mar 00 | Business
Hard times at UK clothes shops
22 May 00 | Business
UK shoppers prove fickle
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