Lingerie brands that cut costs and fail to innovate are falling foul of increased competition and the perils of the recession
The lingerie sector has not been immune to the recession. Last week, lingerie business Intimas ended its licence with women’s and men’s wear brand Ted Baker ahead of a head office restructuring and a shift to a four-day week to help cut costs. In the six months to June 30 2008, the company, which completed a refinancing in October, made a pre-tax loss of £1.65 million.
Meanwhile, Courtaulds, which owns the Gossard and Berlei lingerie brands, is on the hunt for a managing director for its lingerie brands with “turnaround” experience in the sector.
So what is fuelling the decline of the sector’s traditional big names? The rise of high street low-priced own labels from the likes of New Look and H&M continues to encroach on the branded lingerie market’s territory - Marks & Spencer, the UK’s largest lingerie retailer by market share, revealed its lingerie share for the year to March 29 was 25.2%, up from 24.8% the previous year.
Anecdotal evidence also suggests shoppers are generally less inclined to buy lingerie when their disposable income is under pressure, preferring to make do with what’s already in their knicker drawer.
Carol Duncumb, the former chief executive of Intimas and now consultant to Gossard and Berlei, says: “It’s been a tough couple of years for the lingerie sector, not helped by the indie market which has shrunk, but also by the growth of supermarket lingerie businesses.”
Tracy Lewis, chief executive of lingerie brand Freya, agrees: “Consumers have more low-cost choice and some are trading down but we see this as a short-term move in the current climate.”
Aside from competition from cheap and cheerful high street retailers, there is a clear divide between brands that are innovating and those playing it safe. One department store lingerie buyer says: “Brands such as Calvin Klein Underwear and Wonderbra, which have been innovative with technology and bold with product, are doing really well. However, traditionally strong brands such as Freya and Chantelle are not doing so well.”
Another expert adds: “It is crucial for brands to have strong marketing campaigns, but many are cutting back.”
One brand which continues to invest in technology and marketing is Ultimo, which has seen no evidence of the recession according to owner Michelle Mone. She says: “Business is good. It is about brand awareness, innovative designs and incredible quality at incredible prices.”
Duncumb says brands must also now embrace new routes to market, including high-volume contracts, something Mone has exploited with tie-ups with Tesco, Asda and Debenhams. Duncumb says: “Brands should look at those doing really well, such as Ultimo, which is very clear in targeting different customers.”
The lingerie etail sector is also taking a battering. In May, fashion etail sales rose 17% on the previous year, according to the IMRG Capgemini e-Retail Sales Index, but lingerie sales fell 26%. In a bid to boost sales, lingerie etailer Figleaves is branching out into womenswear, menswear and kidswear.
Mone says her rivals will struggle to catch up with Ultimo. However, her mantra of constantly looking at product quality and price is one that the rest of the sector would do well to follow.