STRUCTURED REPORT: UNITED KINGDOM FASHION INDUSTRY

Introduction

The structure of this report gives a diversified range of information concerning the performance and position of the United Kingdom’s fashion industry in the global market (Scuotto et al. 2017, 184). The situation here means the competitiveness of the industry globally and its general contribution to both the UK and global economy. The report focuses on the investigation and evaluation of the value and structure of the industry compared to similar global industries by producing quantitative estimates of its economic value. For this reason, it will rely on findings from various marketing authors who also recognize the divergence of ways in which this industry impacts on both the society and economy. Furthermore, considering there is less quantification of channels of the said channels of effects earlier mentioned. Having that in memory, the report further discusses some of the much broader impacts that structure the industry and its retail formats, and buying and merchandising roles and responsibilities.

Scope and Objectives

The scope of the study of the UK’s fashion industry quantitatively provides the range for the value of the entire industry. The edition, therefore, becomes much more extensive than the “designer sector” alone, thereby including the majority fashion activities like retailing and marketing of a full set of fashion products in the global market. The significant influence of buying, merchandising, and the customer-retailer relationship has been catwalk shows in the centers like Paris, Milan, New York, and London for many high street designs from UK (Armstrong et al. 2018, 43). For this reason, designer fashion becomes the heartbeat of the full UK’s fashion industry, which makes the basis of this report. Elsewhere, it is essential to note there has been a tremendous evolution in the relationship between high street fashion sales and catwalk. The driving factor to this evolution has been the ability of the high street stores to consider and implement the latest marketing trends and the availability of fashionable products.

As part of quality assurance, high street stores have recently been outsourcing leading talented contractors to be at the forefront of designing their merchandise (Sanders 2016, 26). As a result, there is a total guarantee for fashion credibility to the produced merchandise hence providing a lucrative source of income to the fashion businesses. The model widely used currently is proving to be the most successful with Topshop’s partnerships for more than eight years with the New Generation designers in London like Mark First (Smilansky 2017, 101). The most recent collaborations that show the market trends of this industry in the UK involve New Look and Giles Deacon.  Retail outlets like H&M and Gap are following suit by replicating such initiatives. Moreover, there has been a common recent trend of top-performing designers becoming part of the non-clothing merchandise such as home wear and cosmetics creating diversity in customer satisfaction (Francis 2019, 97). Importantly, the scope of the study limits its findings within the UK government’s ongoing analysis of the fashion industry and its global performance while picturing at the broader fashion industry.

The UK Fashion Industry Market Position

The Position of the Industry in the Global Market

The position of any industry in the global market reflects several variables that are comparable to other sectors across the world in the same line of production (Mostafa and Klepper 2018, 614). The variables that the study refers to include the population size of the UK, labor force Unemployment rate, per capita GDP, employment in the fashion industry, retail sale on clothing, and retail sale of leather goods (Frey and Osborne 2017, 255). Besides, it also looks into quantitative criteria of clothing and footwear, the manufacture of footwear, and wearing apparel.

Figure 1: General statistics for the UK fashion industry. Retrieved from: https://fashionunited.uk/uk-fashion-industry-statistics/

Having the fashion industry employed 555,000 people in the entire country makes it a relatively fair employer in the global market (Frenken 2017, 33). The world fashion industry is quite competitive, with China bringing to the market more luxurious and fashionable merchandise to overcome the United States’ largest fashion market. Concerning this competitiveness, mid-market companies, including the UK fashion industry, continues to lag with the persistence of polarization.

Size, Value, and Structure of the Industry

The fashion industry employs about 1.7% labor force in the United Kingdom, with 75% of that population in the sub-industry sector (Holder 2017, 6). From Fig 1, 414,000 of the labor force work in the retail sale of clothing merchandise with the purchase of leather goods and other foot ware providing a reasonably good amount of employment opportunities in fashion (Holder 2017,6). 11% of employees work in this sector, with about 8% deployed in the wholesale of foot ware and clothing (Ha 2017, 11). 6% and 1% being the least in this sector, working in the manufacturing of apparel and foot ware manufacturing (Black et al. 2016, 23).  The structuring of jobs is in the manner described above and depends on the capacity of the top fashion companies in the UK to accommodate employees. The big fashion companies based on capitalization dictate their operational sizes and ability to help employees.

Figure 2: UK Fashion Companies Market Capitalization. Retrieved from: https://fashionunited.uk/uk-fashion-industry-statistics/

Burberry becomes the largest fashion company in terms of market share with a value of 10 billion dollars and 2017 revenue of 3.8 billion (Chaffey and Smith  2017, 9). The merchandise at this company gets to the consumer through retail and wholesale channels. Therefore 77% of revenue comes from retail outlets, while the remaining 22% comes from wholesale merchandising (Bianchi et al. 208, 49). The trend goes down as illustrated in Figure 2 with Mark and Spencer and ASOS having equal market capitalizations.

Next to being the second-largest company is worth 7.16 billion dollars, and it is the most active retail outlet in the UK (Graesser 2019, 166). The scenario makes the company its 4.0 billion dollar pounds in sales annually, and a small amount of revenue totaling 2% comes from the international retail market (Carl and Fedor 2016, 52). Mark and Spencer also come to the third retailer of fashion merchandise in the list currently valued at 7 billion pounds with an annual sales of 10.3 billion pounds (Birkin et al. 2017, 27). The UK provides for this company 89% of sales as it eyes the increasing international markets exploration Birkin et al. 2017, 28). However, due to declining fashion merchandise sales by the company, there is a continuous downfall in the market value, causing a decline in the company’s performance.

ASOS, on the other hand, values it worth 6.2 dollars and comes forth with an annual sale of 1.8 billion pounds (Crommentuijn 2018, 5). It operates as an online market platform selling well above 850 brands in its range of clothing and other fashion accessories Nielsen 2017, 15). Therefore it is clear that its international target market is doing well, with 63% global retail sales reported annually (De 2018, 4). For this reason, ASOS has online foreign competitors, and it is working towards the betterment of service delivery within and out of the United Kingdom.

It is important to note that the most significant market of the merchandise from these top retail outlets is within the United Kingdom. As earlier mentioned from Burberry to ASOS, most of the merchandise they sell to consumers within the UK, and they receive very little from the international markets. The biggest foreign competitors are fashion industries from China, which is emerging to be a threat to the United States in terms of global market scale. The US has been the leading international fashion ware and accessories for quite some time, and with the innovations that China is putting in place, it will soon overtake the USA. The trend leaves these big UK’s retail outlets as mid-market outlets.

Structure of the Industry and Retail Formats

Segmentations of the Current Market

The market structure minds about sex and age of potential consumers, therefore the entire exports of clothing amounting to 9.2 billion dollars breaks down is as follows;

Figure 3: Export of clothing at $9,200,000,000. Retrieved from: https://fashionunited.uk/uk-fashion-industry-statistics/

Equally, the industry imports these goods at $3,400,000,000 annually and the break down shows as follows;

Figure 4: Import of clothing at $3,400,000,000. Retrieved from: https://fashionunited.uk/uk-fashion-industry-statistics/

List of Fashion Retailing Formats

The companies retailing fashion wear in the UK have various retailing formats in different parts of the universe. Depending on the type of retailing activities they carry out, they have different sizes of retail outlets where customers conveniently pick their merchandise once delivered from the manufacturers. The widest retailing formats ranging from departmental stores to dollar stores avail to customers different types of merchandise, both on-demand and with speculative motives. The formats are follows

Departmental Stores- offering a wide range of products to the consumer under one roof. The merchandise retailed here includes foot wares, apparel, jewelry, sports ware, toys, etc.

Discount Stores- are offering a wide range of products to the consumer at discounted prices. The merchandise retailed in these stores is quite similar to those in the departmental stores, and ASOS companies mostly use these stores as retailing formats.

Warehouse Stores- This retail format deals in limited stock retailed in bulk and at a discounted rate. The format bothers less about the interior design of the stores. Further, there is no uniformity in the display of the merchandise. UK companies use such stores to retail all kinds of products similar to departmental stores.

Specialty Stores- Stores specialized in specific merchandise; the companies have a wide range of such stores across the UK to enable convenience in customer service. The merchandise retailed in these stores has a homogeneity nature.

Buying and Merchandising Roles and Responsibilities

Buying and Merchandising Process

The buying is relative and open for the retailing companies to make their own choice of the process in line with their objectives of minimizing costs while maximizing profits. Most of the top-performing UK fashion companies are importing less merchandise then they import annually to encourage local consumption and internal circular flow of money. The general principles that these companies use in buying and selling processes include understanding the market targeted and building the merchandise plan.

Furthermore, they ensure that they buy what the customer needs later build the correct assortments while being consistent for customer retention purposes. Moreover, they provide they offer value as they understand the needs of the vendors and negotiating the win-win situation during the merchandising process. Finally, as they seek to surprise the customers, they share real-time information as they make mistakes as positive challenges for making things better in the future.

Structure of Buying and Merchandising

The companies have a structural framework in the buying and merchandising processes with the organizational structure recognizing the position of the head of buying and selling. The people charged with this responsibility have product and marketing rights and have both the final say and the responsibility of activities in this sector. The buying company brings in the primary product department, including head of purchase (Boys 3-10 years), Head of purchase (Girls 3-10 years), and Head of purchase (Infants and accessories, 3-10 years). Further, the Head of purchase Footwear will be in charge of all footwear.

The replication of the structure works with the designing company, the organization concerned with technical services, and merchandising organization. The team interacts with other departments within the companies and with their target customers to ensure smooth business interactions. All engagements channeled through to other departments with the help of departmental heads for uniformity and organization of daily activities.

Key Performance Indicators (KPI)

The B and M teams in fashion companies’ take actual sales versus planned sales as the KPIs, whereby they consider high performance when actual sales are above projected sales. Moreover, they also find an annual increase in the units sold, an increase in the price per unit of a merchandise or total average selling price, and the terminal stock end of a trading period as KPIs. There are various approaches towards gauging the KPIs, which include, stock plans (Total stock holdings ÷ {Value of sales Expected + Discount}) and the launch of a new phase (Sunder 2016, 1132). Moreover, there is a relationship of suppliers within B & M and roles played by buying and merchandising

There are five basic KPI formulas, for instance, counts (Number of satisfied customers, accidents or sales) and percentages (% of satisfied customers, accidents, or sales).

Moreover, some of the totals (total sales invoiced) can also show KPI, averages, and ratios. In the illustration, counts talk about accurate counting of the recorded amount of merchandise sold at a particular time, for instance, Burberry earning a total 3.8 billion from sales twice as much in a year (Montanari 2018,15). The sales count is easily convertible as a percentage, and managers can verify sales invoices for the year (sum of totals) and averages and ratios with base value as the total sales.

Conclusion

The fashion industry in the United Kingdom has been performing relatively well compared to other international fashion industries. The structured report gives details of the comparison between these companies and the super performers like China and the USA. A detailed description of the buying and merchandising responsibilities also outlines the performance indicators of the top-performing companies in this industry in the UK. Therefore, as much as the KPIs analysis indicates that the UK companies do more of importation than exportation and that they need to retain money in the internal circulation, international engagements need to rise. To portray the global face, the UK must empower its companies to compete favorably with other best performers like the United States and China.

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