This week we heard of the woes of value chain Store Twenty One who has had a visit from the bailiffs after failing to pay rent. Victoria Gallagher looks at why the value sector seems to be so split with some performing strongly and others struggling in the weak economy.
The Store Twenty One article made me question why the retailer has issues operating in the value end of the market when its competitors such as Primark have been flying during these austere times.
To me it seems as though the value sector is completely polarised. At one end of the market you have Primark, who are dominating the market and making it almost cool to be value. I remember a time when my friends wouldn’t have been seen dead in a dress from Primark but will now exclaim proudly that their jumper came from Primark and cost them a tidy tenner.
As Primark’s sales are soaring they also have the critical mass to buy in bulk and keep prices low, something that smaller chains may find it hard to do.
Primark has the recipe that so many others struggle to get right, it somehow manages to hit the fashion nail on the head but also offer extremely good value for money. Its product shines through and competes against most others on the high street.
While other retailers are having success with their online business it is difficult for value retailers to make a profit from ecommerce. As margins are so tight in the value world it is tough to make enough money from a transactional website, especially in a world where free delivery and returns are expected.
Primark also started small and has only recently expanded its portfolio to include some of the larger flagships in high profile locations. However retailers such as Store Twenty One have been around for decades and over time have multiplied their store portfolio to have hundreds of locations in their stable. This could lead to problems as it is difficult to reduce store portfolios due to leases, etc.
The supermarkets have also become a major player in the value market and many of the consumers who would previously have shopped at a value clothing store will now pick up clothes while doing their weekly shop.
The value clothing sector has been through a tough few years with mass consolidation and I believe over the next years the economic climate could mean even further cuts as the key players reign supreme and the smaller chains could sadly fall by the weyside.
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