Growth in the value clothing market is set to slow down for the first time in 10 years as the sector reaches consolidation, according to retail analyst Verdict Research.
Although the UK value sector continues to outperform the total clothing market, with growth of 8.9% this year against 3.8% overall, Verdict's UK Value Clothing Retailers 2007 report predicts its slowest rate since 1997.
Verdict added that the growth is largely led by one retailer - Primark - which is estimated to increase its share by 4.1 percentage points this year to 18.49%, becoming the market leader ahead of George at Asda, whose share is expected to fall to 16.31% from 17.16%.
Verdict said one of the main factors affecting the slowdown is that middle market players have sharpened their own prices in reponse to value rivals. As a result, Verdict said value players have been working much harder to drive footfall, by extending their price architecture, investing into store environments and supporting this with higher marketing spend, which drives up costs and lowers profit densities.
According to the research, as value retailers reach space and demand capacity in the UK, they will look at international expansion to drive growth.
In 2007, the £8.5 billion value sector accounts for nearly 25% of all clothing spend in the UK.