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Premium lifestyle market in the UK to grow to US$ 11.87 B by 2023

The future of the premium lifestyle market is expected to be favorable on account of increased consumer confidence supports demands for differentiation encouraging brands to trade up for quality and value for money. The market is projected to reach US$ 11.87 billion at a CAGR of 3.8 % over the period of 2019-2023.

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Definition / Scope

Premium lifestyle brands are unified by a distinctive brand and signature handwriting that is recognized by customers. The brands are top of mind, featuring high on consumers’ shopping repertoire. As a result, customers remain loyal, shopping with the brand for many years. The strong brand ethos enables premium lifestyle brands to stretch across multiple categories such as menswear, women wear, children wear, footwear, accessories and multiple channels like stores and third party channels.

Market Overview

The UK “premium lifestyle” was valued to be a $9.75 Billion market in 2018 and is estimated to grow with a CAGR of 3.8% during the forecast period of 2019-2023.

The market is supported by growth drivers such as polarised market, brand affinity, brand engagement and emergence of new entrants into the market. However, various reasons inclusive of inflationary pressures in the supply chain, rising environmental concerns, and sustainability, are among the few restraints for the growth of the market to stumble upon.

Besides, such reasons, rising new mass market abroad and the growing popularity of casualization are motivating consumers to buy the products, which in turn is expected to fuel the growth of the market. Moreover, the popularity of the online retail platform is rapidly increasing, owing to its advantages such as the ability to read reviews of other consumers and ability to compare the price of products, brand, and product variety.

Thus, the distribution of products via the online retail platform is anticipated to boost the growth of the overall of the premium lifestyle industry.

The UK "premium lifestyle" market is highly competitive, with several international as well as domestic players present in the market which include Ted Baker, Superdry Reiss, Mint Velvet, Kurt Geiger, All Saints, Banana Republic, French Connection, Karen Millen and others. The domestic manufacturers will continue to collaborate with global players to develop high-end products for local consumers.

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Key Metrics

Metrics Value Explanation
Base Year 2018 Researched through internet


Market Risks

  • Counterfeit Goods: The market offers a lucrative potential for growth; however, the presence of fake and low-priced products restraint the growth of the market. Premium Lifestyle market goods by renowned brands have a high price range, which is not affordable by the lower income groups. Hence, the local suppliers design the same style products at comparatively lower costs. Availability of counterfeit goods restricts the sale of branded goods; thus, restricting the growth of the market.
  • Adopting the changing purchasing habits: The Changing purchasing habits of consumers are playing a key role in the sales of goods across Europe. Several manufacturers are struggling to find successful growth in retail sales as European consumers are opting for online purchases. While upsurge in online sales is favoring the expansion of the market, manufacturers are forced to adopt direct-to-customer business models, which leads to abruptly ending their strong rapport with retailers.
  • Potential lawsuits: Manufacturers of products must consider the safety of their products to the consumers. Companies can face serious lawsuits from injuries caused by defective products. This is especially true in Europe, where lawsuits are a common recourse for consumers. Due to potential litigation, many who would aspire to produce and sell sporting goods might withdraw and invest elsewhere.

Top Market Opportunities

  • Rising Popularity of Casualization: The premium lifestyle market has benefitted from the shift to more casual attire, both at work, but also at more formal 'dress-up' events. This has expanded the range of occasions where premium lifestyle brands’ clothing is appropriate. Casualization is set to continue, with casualwear becoming acceptable across more occasions.
  • The growing importance of online sales: With internet penetration rates having grown exponentially over the past decade, online retailing has become increasingly important as a source of growth across most industries, including premium lifestyle. Indeed, a study by Verdict, the consumer research group, forecast that online sales of clothing and footwear would grow at the fastest rate over the next four years compared to all other sectors analyzed.
  • Shift from traditional brands to DTC brands: By avoiding the retail markup enables DTC to offer a combination of better qual¬ity, service, and lower prices. The growth strategy is working and core brands such as Vans are taping the opportunities. The skateboard footwear brand reported a 21% revenue increase in 2018 driven by digital partners and key strategic accounts.
  • Rise of new mass markets abroad: Rapid growth in major emerging markets (EMs) such as Brazil, Russia, India and China (the BRICs), Turkey and Mexico has implied a sharp rise in external demand for retailers over the past 10 years. Indeed, given much stronger medium-term growth prospects in EMs relative to more developed countries, it is likely that sales growth will be increasingly export-led.

Market Drivers

The market is driven by consumers’ attitudes towards clothing and brands’ ability to engage with their customers.

  • A polarised market works in lifestyle brands favour: The performance of mid-market retailers (e.g. M&S) has been impacted by the outperformance of value specialists (e.g. H&M and Primark. Similarly, luxury brands have continued to gain share, as consumers’ looks to purchase investment pieces. This polarisation has created a gap for high quality yet affordable brands, which is likely to continue, albeit at a slightly slower rate. Premium lifestyle brands like Joules total sales rose to 19.2%, Fat Face 12%, and Ted Baker’s retail sales up 9 % during 2018.
  • Brand Affinity: Consumers are increasingly looking towards brands to provide a sense of identity and belonging. This has contributed to the growth of premium lifestyle brands, with consumers buying into a brand with a particular heritage/theme, and therefore buying products from across multiple categories, which is likely to continue.
  • Brand Engagement: The growth of online shopping and social media and innovation on in-store experience have enabled brands to build awareness and engage with their customers more regularly. This is important for premium lifestyle brands, where brand identity is key. This has helped to establish a premium lifestyle as a distinct segment in the market and is likely to continue to do so.
  • New Entrants: A number of US and European retailers are beginning to enter the UK market (e.g. Lululemon, Tory Burch, Kate Spade). Smaller UK brands are also scaling quickly (e.g. Rapha, Oliver Bonas). This is likely to grow the premium lifestyle market further.

Industry Challenges

Some of the challenges faced by the organic sector today are:

  • Issues of sustainability/ecology: The growing global consensus surrounding the importance of moving towards more sustainable production patterns given the threat of global warming was cited by a number of respondents as a key future risk. The issue is likely to be particularly relevant to retailers, who will have to weigh up the benefits of outsourcing in terms of lower-cost production against the wider societal costs.
  • Rising Environmental Concerns: The growing environmental concerns with respect to various materials such as synthetic rubber used in sports footwear is expected to restrain the market growth. Hence, various footwear companies are focusing on taking initiatives with an objective to reduce the environmental impact of sports footwear. For example, Nike Inc. launched the MAKING app which aims to facilitate the producers and designers in monitoring and tracking the environmental effect of materials used in these products.
  • Inflationary pressures in the supply chain: These are expected to increase significantly in the medium term. They are likely to build through a variety of channels. Firstly, supply and demand fundamentals for relevant commodities, particularly cotton, suggest that prices could rise significantly. Secondly, as China seeks to move up the value-added chain and rebalance its economy more toward domestic consumption, labour costs will rise.

Technology Trends

With internet penetration rates having grown exponentially over the past decade, online shopping has become increasingly important as a source of growth across most industries, including premium lifestyle. According to the study by Verdict, the consumer research group, the online sales of clothing, footwear and accessories would grow at the fastest rate over the forecasted period of 2019-2023 compared to all other sectors analysed.

According to Mintel, Brits are estimated US$ 2.43 billion on online sales of premium lifestyle clothing, accessories and footwear at the click of a button. By 2023, the online market will increase by 8.8%, continuing the premium lifestyle’s spot as one of the popular category bought online.

Pricing Trends

A distinct brand image, superior quality, unique designs and immersive store experience are some factors brands are justifying to high price points. It is anticipated deflation from 2019 onwards, driven by lower supply chain costs and discounting by mass-market brands.

The rise in market growth is expected to be powered by an increasing volume of disposal income, improved consumers’ confidence and an increase in consumer sub-segments. Essentially, this will be supported by deflation of clothing prices, a shift towards experience based expenditure, and innovation by the clothing retailers.

While some brands continue to hike the prices on their offerings, local manufacturers in the region are capturing the demands for consumers in middle- and low-income groups. Through 2019-2023, the market in Europe will witness a steady expansion, anticipating that its contribution to global revenues will incur a considerable uptick.

Regulatory Trends

In 1994, the European Parliament and the Council of the European Union issued an important directive for the internal market. This Directive introduced a common labelling system for the main components of products sold in the EU. It harmonised the diverse laws and regulations that had previously existed in EU countries relating to the labelling of materials. These diverse laws and regulations were creating barriers to trade.

The European Union (EU) is now a trading bloc comprising 28 countries in Europe. All Member States adopt common external trade policy and measures. Meanwhile, the European Union has directed EU countries to align laws relating to the labelling of materials in sporting goods, protecting consumer interests, and reducing the risk of fraud for consumers and industry. EU legislation on chemicals and personal protective equipment may also affect goods.

Animal welfare is one of a growing number of sustainability issues gaining importance in the leather and textiles industries. Likewise, all products marketed in Europe must be safe to use. Among the 28 member states of the European Union (EU), the circulation of goods and people has been free since 1993.

Other Key Market Trends

Department stores are proving to be an increasingly dangerous channel and premium brands' reliance on department stores is at risk. With numerous department stores losing sales, e.g. Debenhams and House of Fraser, concessions are in danger of becoming loss-making. Additionally, department stores, through consistent discounting and poor merchandising, can damage brand reputation. The decline of Michael Kors is an example of this where its merchandise was discounted throughout department stores and the brand became too accessible and therefore undesirable to shoppers.

Market Size and Forecast

The UK premium lifestyle goods market size was valued at US$ 9.75 billion in 2018. It is anticipated to register a CAGR of 3.8% over the forecast period to reach US$ 11.87 billion by 2023.

The growth of premium lifestyle goods market is driven by shoppers continued focus and demands for design and differentiation encouraging them to trade up for quality and value for money. Moreover, this trend is expected to hold for the years 2019 to 2023.

The UK sporting premium lifestyle market is segmented on the basis of product type into clothing, footwear and accessories.

  • Accessories: The accessories category commanded the largest share of 47.28 % share of the total premium lifestyle product sales in the region in 2018. The market accounted for US$ 4.61 billion in 2018 and is expected to reach US$ 5.47 billion by 2023, growing at a CAGR of 3.6% over the forecast period of 2019-2023. Rapid technological advancements and continual innovations to meet consumer preferences are working in favour of the market. Since consumers are demanding more versatile accessories with different functionality, retailers need to continue producing new types of accessories.
  • Clothing: The clothing category is a rapidly growing category. The market accounted for US$ 4.6 billion in 2018 and is expected to be the largest segment in terms of value at US$ 5.7 billion by 2023, growing at a CAGR of 4.5% over the forecast period of 2019-2023. Due to the growing men wear investment from value players, male consumers, especially 16-35 years age group, continue to have a greater affinity with branded clothing, increasing premium penetration. As a result, 41.0% of male clothing shoppers bought premium clothing in 2018 compared to 34.7% of females. The premium segment of the total men wears market will reach 18.0% in 2023, versus 12.0% in women wear.
  • Footwear: The footwear segment is the smallest category which is expected to grow from US$ 0.6 billion in 2018 to US$ 0.7 billion in 2023. There have been constant innovations and technological advancements in the field of footwear market to provide the customer's performance-driven, and advanced footwear.

The UK "premium lifestyle" clothing market is further segmented on the basis of category into womenswear, menswear, and childrenswear.

  • The womenswear occupied the largest portion of the UK market, accounting for 56% of sales in 2018. The market accounted for US$ 2.6 billion in 2018 growing at a CAGR of 5% over the forecast period of 2019-2023.
  • The value of the menswear market was valued at US$ 1.2 billion growing by CAGR of 5.3% over the next five years, fuelling growth in the value sector and outperforming the womenswear market.
  • The childrenswear is the smallest category among clothing category having a market value of US$ 800 million growing modestly at CAGR of 2.6%.
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Market Outlook

The UK premium lifestyle market is forecast to register growth of CAGR 3.8% reaching US$ 11.87 Billion in value terms by 2023. The clothing and accessories segments will dominate the market share during the forecast period. This is primarily attributed to on-going polarisation in the market both in terms of price and fashion, which has supported the growth of the premium lifestyle segment.

These products have high sale potential for market growth during the period of 2019-2023. The polarisation in price and fashion has created a gap in the market as mid-market retailers focus more on value and fashion offers which have allowed premium lifestyle brands to grow, establishing this as a distinct segment.

With CAGR of 5.3% menswear is expected to outgrow other segments of the market, driven by brands and retailers' investment in their menswear offering. Likewise, niche ranges are expected to drive incremental growth in women wear, including plus-size, petite, tall and maternity clothing.

Among all the channels in the UK premium lifestyle market, the online channel is expected to continue to take share from conventional channels and is forecast to account for 30% of the market by 2023 which has historically been dominated by clothing specialists, with limited change in channel mix expected. Major players in the industry determine this shift at the moment and much changes are not expected, however as new entrants and smaller once verge for a competitive edge, it is expected that the online store will witness a higher boom in the near future.

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Technology Roadmap

The popularity of the online retail platform is rapidly increasing, due to its advantages such as ability to read customer’s feedbacks and ability to compare the price of goods, brand, increased comfort, and product variety. Thus, the distribution of goods via the online retail platform is anticipated to boost the growth of the market

There is a rising trend for purchasing consumer products online and this is mainly due to the increasing emphasis on m-commerce and e-commerce platforms. While over four-fifths (84%) of online shoppers have used a laptop/desktop to buy products online, the use of mobile devices is growing, with almost half (48%) of Millennial having bought products from their smartphone.

Due to the increasing popularity of shopping through mobile devices, it is estimated that the online retailing market will grow to 4% by 2021. The growth of social media sites (e.g. Facebook, Instagram and Snapchat) has allowed consumers to share their experiences more widely, in turn creating more demand for the experience to share.

Likewise, the increased security features for online payments, free delivery, improved online customer services, and the customer-friendly designs of shopping websites, also contribute to the growth of the m-commerce market. This increasing focus on mobile commerce will be a major trend that will gain attraction in the online sports retailing market during the forecast period of 2019-2023.

Distribution Chain Analysis

On the basis of the distribution channel, the market can be classified into store-based retail and online/ internet. The UK premium lifestyle clothing, accessories and footwear market has historically been dominated by clothing specialists, with limited change in channel mix expected. The speciality shops segment dominated the market in 2018, accounting for a share of a little over 70%.

These stores have a broad portfolio of products and provide required support and information to consumers through expert customer service personnel. Moreover, convenience provided by this distribution channel and its ability to stock popular brands has been supplementing the growth of this segment.

However, the online channel is expected to continue reaping havoc on the conventional stores’ market share with a forecasted increase of 30% of the industry’s market share by 2023. Usage of mobile phones and other electronic devices by consumers to browse and shop online for is increasing significantly. In response to this transition in the nature of consumers’ buying patterns, brands are now focusing on consolidating their presence in online retail. Delivery is becoming a key online battleground and the use of delivery passes and more dynamic delivery options could increase loyalty towards a specific retailer.

Competitive Landscape

The UK premium lifestyle is highly competitive. Ted Baker and Kurt Geiger lead the premium clothing and footwear markets respectively, with iconic branding, product design and innovation and aspirational store experiences making them go-to destinations among their loyal customer bases. The industry has seen many mergers and acquisitions over recent years. The presence of online players operating across the globe make this market appears highly competitive.

The industry is highly fragmented, with many brands competing, from basic discount brands to high-end brand names. Even well-established brands have to work hard to maintain their share of the market. The premium lifestyle brands have benefitted from the growth of internet shopping and social media, which has helped them to build customer engagement, loyalty and affinity online. Due to factors such as price wars the level of competition among the companies in this market space will further intensify during the forecast period of 2019-2023.

Competitive Factors

The companies are increasingly following strategical alliances such as acquisitions and product expansions in new locations to improve their market positions. Additionally, the major players are also focusing on strengthening their product portfolio by acquiring small and local brands.

UK high street retailers are looking to innovate their proposition as they look for new sources of growth and retailers are extending into new categories and developing new concepts. Jigsaw Duke St. Emporium combines shopping, coffee and culture. Likewise, Oasis flagship store in Tottenham Court Road has a cafe and beauty station.

Moreover, companies focus on introducing new technologies in order to improve in-store retail experience whilst offering a seamless shopping experience over multiple channels. There have been constant innovations and technological advancements in the market in order to provide customer's performance-driven, comfortable and advanced products. These players undertake various initiatives and adopt different strategies, such as partnerships, and launching new products and services to sustain in the competition. For example, Rihanna designed two collections inspired by her personal style for River Island.

Key Market Players

The key players in the UK premium lifestyle market are Ted Baker, Reiss, Mint Velvet, Kurt Geiger, All Saints, Banana Republic, French Connection, Karen Millen and others. The domestic manufacturers will continue to collaborate with global players to develop high-end products for local consumers.

Company Profiles

  • Ted Baker: It is engaged in the design, wholesale, and retail of menswear, women wear, and accessories under the Ted Baker name. The company operates through three segments: Retail, Wholesale, and Licensing. It offers a range of collections, including global, endurance, accessories, bedding, children’s wear, crockery, eyewear, footwear, fragrance and skin wear, gifting and stationery, sleepwear, neckwear, technical accessories, tiles, and watches. The company distributes its products through retail stores, concessions, independent retailers, and department stores, as well as through its e-commerce business
  • Kurt Geiger: It was founded in 1963 and is based in London, United Kingdom. It operates as a retailer of luxury shoes and accessories for men, women, and kids. It provides shoulder bags, cross body bags, backpacks, and pouches; and shoes, boots, pumps, sneakers, sandals, and wedges for women. The company also offers formals and brogues, boots, sneakers, drivers and boat shoes, sandals, and slippers for men; and crib shoes, sneakers, boots, ballet pumps, sandals, school and party shoes, and accessories for kids. It markets and sells products through its stores and online in the United Kingdom and internationally.
  • Reiss: Reiss Ltd. engages in the manufacture of design-led menswear, women wear, and accessories. It offers men’s suits and tailoring, blazers, coats and jackets, knitwear, shirts, tops, trousers, jeans, shoes, accessories, bags, and underwear; women’s dresses, jumpsuits, tops, knitwear, coats and jackets, suiting, skirts, trousers, jeans, bags, shoes, and accessories; and corporate services and franchise opportunities. The company sells its products online. Reiss Ltd. was founded in 1971 and is based in London, UK with stores and concessions in the United Kingdom and internationally.
  • All Saints: The company was founded in 2000 and is based in London, United Kingdom. All Saints Retail Limited retails leather jackets, clothing, and accessories. Its products include dresses, coats, leather jackets, handbags, and tops and shirts for women; and leather jackets, coats, T-shirts, shirts, and trousers for men.
  • Banana Ltd: Banana Republic, LLC owns and operates a chain of apparel retail stores. It offers apparel, shoes, and accessories for men and women. The company provides dress shirts, casual shirts, knits, sweaters, outerwear, jackets, blazers, vests, suiting, pants, chinos, denims, shorts, swimwear, underwear, socks, blouses, tops, dresses, skirts, sleep and loungewear, gift cards; and jewellery including necklaces, bracelets, earrings, and rings.
  • French Connection: French Connection Group PLC designs, produces, and distributes branded clothing for men, women, and children. The company also provides toiletries and fragrances, shoes, watches, jewellery, eyewear, and furniture, as well as accessories products. It operates retail stores and concessions in the United Kingdom, Europe, the United States, and Canada; and e-commerce stores.
  • Karen Millen: The company was founded in 1981 and is based in Witney, United Kingdom. Karen Millen designs and manufactures apparel, footwear, and accessories for women. Its apparel includes dresses, knitwear, coats and jackets, T-shirts, tops, jeans, trousers and jumpsuits, and skirts. The company’s footwear comprises boots, shoes, flats, and sandals. Its accessories include bags, purses, jewellery, belts, hats and gloves, watches, and sunglasses. The company also provides franchising opportunities. It offers its products through its stores and online in the United Kingdom and internationally.

Strategic Conclusion

The UK premium lifestyle market is forecasted to grow at a moderate rate during the projected period (2019-2023). The market is supported by growth drivers such as forecast growth of the UK economy and increased consumer confidence supports.

However, the availability of counterfeit products along with high prices of few products might restrict the market growth. Despite the persistent consumer appetite for lifestyle brands, midmarket department stores sales continue to suffer. Hence, lifestyle brands must evolve and focus on different distribution channels, with a seamless online experience the priority.

Further Reading

Appendix

  • CAGR: Compound Annual Growth Rate
  • EU: European Union
  • US$: United States Dollar


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