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Consumer Research


Romance can conquer the recession

Romance can conquer the recession

Valentines Day provides a much needed boost to underwear retailers’ sales, as they face one of the most challenging periods of the past 20 years.

Growth in the £4.1 billion underwear market is forecast to fall into negative territory in 2009 as cash strapped consumers are forced to cut back on spending, says Verdict Research in its latest report UK Lingerie and Underwear Retailing 2009.

Retailers will therefore be hoping to entice customers into buying underwear gifts for their partners, raising the temperature in an increasingly frosty winter and proving that romance can conquer the recession.

Valentines Day provides a welcome distraction from the recession, “Retailers will be working harder than ever to seduce customers into making expensive lingerie purchases. With so much focus on the economic situation, Valentines Day provides the perfect opportunity for couples to take some time out and treat a partner to some glamorous new underwear” commented Sarah Peters, analyst at Verdict.

Consumers searching for the perfect Valentines Day gift are now presented with a much wider choice of underwear as non specialists have improved their offers dramatically over the last five years. Department stores offering a broad range of brands, such as Debenhams, are proving increasingly popular for special underwear purchases.

As well as this lingerie specialist, La Senza has also been successful at appealing to customers buying underwear as a gift, through offering a strong selection of occasionwear to complement its more day to day ranges.

However at the value end of the underwear market, retailers have also been growing their market shares with low price points appealing to an increasingly price sensitive customer. Primark’s opening of larger stores has enabled it dedicate more space to underwear and has resulted in its estimated underwear market share increasing from 4.7% in 2003 to 7.7% in 2008.

The value retailer is growing its authority in underwear by offering a well segmented range and catering for a broad variety of customer needs, all at very affordable prices.

With non specialists all vying for a share of underwear expenditure, the traditional shape of the market is changing. While M&S still remains the market leader by far, with a share over three times the size of it nearest competitor, Primark, this share is gradually being eroded.

New entrants to the market offering a wider variety of choice, a growing trend for shapewear and shape enhancing underwear and underwear becoming more influenced by fashion trends have driven growth in underwear expenditure by an estimated 40% between 1999-2009, or just over £1.2bn.

2009 will be the most challenging period for over 20 years

With value retailers adding downward pressure on retail prices and the weak pound impacting on retailers’ margins and a backdrop of consumer uncertainty, 2009 will prove particularly challenging for underwear retailers. Margins can be protected through driving additional volumes of each line.

For many retailers this is likely to mean slightly edited ranges to ensure higher volumes of fewer lines. Managing margins also requires tight stock management to ensure minimal markdowns. Non-specialists such as clothing retailers and department stores have the ability to flex their space according to faster and slower growing categories and are therefore in a better position to manage margins than specialists.

Online offers opportunities

For men too embarrassed to make the often daunting trip to an underwear retailer, many may prefer to buy valentines gifts for their partners online.

Carol Ratcliffe, Senior Analyst at Verdict commented “Retailers with transactional websites are also proving popular during the Valentines Day period. Men shopping for gifts can purchase for their partners online, and avoid the often uncomfortable process of visiting crowded stores. It also has the added advantage of allowing them to double check sizes before purchasing.”

Indeed, the online channel is an area that offers further growth potential for underwear retailers. With online clothing expenditure forecast to grow 37.7% in 2009, underwear retailers need to be investing in their transactional websites.

Not only is online popular for gifts, but it also adds convenience for customers that do not want to spend time searching for their size in store and provides access to a wider range of sizes. It is particularly useful for customers loyal to a brand or retailer that may simply want to make a replacement purchase.

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