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High street chains hit the high notes

Although the appetite for rock-bottom prices in the value sector shows no sign of abating, some high street retailers are changing tack and tapping into a growing desire among shoppers for premium product

The next six months will see many of the high street's big names staking a claim to the premium end of the fashion market. Last week, Drapers reported on plans by Debenhams and Marks & Spencer to launch premium ranges in the autumn.

In what M&S calls a "stand-out statement", Autograph Exclusive, the retailer's most high-end line yet, will roll out across five stores in September. The limited edition womenswear range will be priced from £99 to £699 and will form a clearly differentiated offer.

Debenhams is also treading the premium path. It is expanding its Limited Edition brand to create a dedicated area in-store. The new 100-piece collection, inspired by the catwalk ranges of the Designers at Debenhams, will be sold in the retailer's top 20 UK stores from this October. It will retail at up to double the price of the Designers at Debenhams mainline.

The collection will be allocated its own area in store, which will have a "party atmosphere", while each piece will be individually numbered to create the air of a collectors' item.

Earlier this year, Drapers reported that both Evans and Reiss were also launching premium ranges, which are intended to broaden their scope. Reiss owner David Reiss said the decision was all about creating "affordable luxury" stamped with the distinctive Reiss handwriting.

And there are more examples; Next's Signature men's and women's range will launch in 90 stores in late August, before being rolled out into all its stores by Christmas, while Austin Reed has been trialling a premium line for men and women, also called Signature.

So at a time when the cost of clothing has never been lower in real terms, why are so many high street retailers heading down the premium route? Maureen Hinton, senior retail analyst with Verdict Research, says it is partly driven by a need to differentiate, as well as boost margins.

"There has been a big shift in pricing in the past five years," she says. "Retailers' pricing has gone down and the value end has taken a chunk of the market. You can now buy things for whatever price you want, so consumers are looking for something different. There is an opportunity out there and retailers are taking it; they can't keep lowering prices as their costs are going up."

But the shift is also being driven by consumers, Hinton adds. "Consumers are becoming saturated with product and can buy just about anything, at any price. There seems to be a trend to want to trade up and have something more exclusive. It's an aspirational element that helps the customer feel special."

Hinton says that although the move towards high-end collections could be seen to be treading on the toes of independents, it should not be a cause for concern, arguing that the reverse is actually true.

"It might generate more interest for independents," she says. "The trend towards trading up signifies that people are prepared to pay more and many people would rather buy from an indie than from the high street. Yes, it's competition for independents, but it's also an opportunity they should exploit."

John Adams, trading director at independent department store Jarrolds in Norwich, also views the trend positively - up to a point. "If price points go up, say at M&S, it helps the perception that independents are not as expensive as they may be perceived. But if premium lines become a big element, and high street retailers get it right, the move would become more of a concern."

But he is sceptical that it will take off. "It's fine launching these premium ranges, but unless you have the staff and service to complement it, it doesn't work. Independents are geared up to offer high levels of service, including personal shoppers and ambience. Anyone can put any range of a product in their store, but without the staff, service and ethos it's unlikely to be very successful."

Nick Brown, chairman of department store Browns of York, agrees there is room in the market for a higher price product but stresses the value of an established brand with history. Without this, he argues, there is little trust. "Will the customer understand the premium labels? It is difficult to launch a higher-end brand without history - it might be confusing to the customer.

"If it is done well, it will be helpful to the independents because it will give confidence back to the higher-priced product. The culture of celebrity has educated the consumer that you can mix a £120 pair of trousers with a £15 top."

Barney Rodgers, a partner at design agency Bureaux Design, stresses the need for retailers to create an individual sense of style, coupled with a strong brand personality. Launching premium labels, he says, is "a way retailers can reach new consumers while building brand equity".

This means offering product to fit different parts of people's lifestyles, he says, including occasions where a formal outfit is a necessity. "The consumer propensity to spend in these areas is high, as long as he or she can equate value for money."

Joe Baker, managing director of design consultancy Joe Baker Design, echoes the thoughts of Jarrolds' Adams about the importance of creating appealing surroundings for high-end lines. He says: "In some ways the product is an easier challenge than the environment. The way the brands develop is personal and reactive; it's difficult to translate that personality into a bigger environment."

Increasingly, return on sales per sq ft and adding margin is a huge driver behind retailers' forays into the premium arena, says Baker. But another big incentive is scope and variety. "There is a perception that quality has slipped. Retailers are thinking: 'we could own a brand that puts us on a different trading level and adds margin.'

"And if established retailers can have decent brands on the floor they can offer a different level of product; they can source cloth that they wouldn't be able to source otherwise. The fact that you have a premium product in store gives more freedom in price, quality and design."

For M&S, the concept behind Autograph Exclusive is described by its design team as a "designer's dream". Under director of womenswear, lingerie and girlswear Kate Bostock, the design team were told to forget about whether the designs were commercial enough for the mass market, and were instead asked to think about what they would design if they had everything at their disposal.

The result is a collection that Neil Hendy, M&S's head of design for smart womenswear, describes as "the icing on the cake" for the business.

For high street retailers, many of which struggle to stand-out among a sea of similar low-priced stock, taking the premium route has the considerable advantage of creating instant pizzazz.

This is a benefit that Baker believes should act as a warning for other retailers that are yet to raise their game. "The danger at the moment is that everyone has the same classic, basic product and the only thing that recommends it is price," he says.

PREMIUM PLAYERS

- Marks & Spencer is to launch a limited-edition collection, called Autograph Exclusive, in five stores this September, priced from £99 to £699.

- Debenhams is launching an expanded premium 100-piece Limited Edition collection in 20 stores, retailing at up to double the price of the business's Designers at Debenhams collections.

- Plus-size womenswear retailer Evans is selling a 16-piece premium occasionswear range online from this month, in an attempt to broaden its offer. Prices are between 20% and 30% higher than its mainline.

- "Affordable luxury" is on the agenda for Reiss, which will be introducing more premium-level products, as well as entry-level lines, to widen its appeal. Suits will be introduced at the £500 mark, priced 25% higher than its previous highest price tag.

- Next's Signature range will go into 90 stores in August and roll out into all its stores by Christmas.

- Hobbs launched premium capsule range Limited Edition for autumn 06. Using more luxurious fabrics and edgier styles, it sells at a 30% premium.

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