Luxury shops set to cash in on 'flight to quality'
Luxury fashion retailers are set to be the big winners over the next three years, boosted by a recessionary flight to quality, an ageing population and by the "Kate Middleton effect" before and after the Royal Wedding, according to a survey by Barclays Corporate.
The bank forecasts the premium clothing sector will grow by 29 per cent to be worth £8.6bn by 2014, compared with today's estimated £6.7bn. This will be ahead of "real growth" of 9 per cent in the wider clothing industry and of the 21 per cent rise in the lower-priced value market.
The stellar growth at premium clothing retailers will be partly driven by consumers continuing to focus more on buying fewer, more expensive items of clothing, but also by an ageing population placing more emphasis on quality and service over price – a trend to which more retailers will respond.
Richard Lowe, the head of retail and wholesale at Barclays Corporate, said: "Consumers want quality as well as value, and are happy to trade up to buy statement pieces. That said, the value end of the market will remain buoyant and enjoy continued growth."
He also expects a boost from the "Middleton effect", which has seen retailers such as Reiss and Whistles benefit from the publicity that Prince William's wife-to-be generates for the clothing she wears.
Mr Lowe said: "Kate Middleton is expected to do for many British high street names what Michelle Obama did for J Crew in the US. Shoppers really get inspired by these big glossy images of her in styles which are very accessible."
For much of the past two years, profits and sales at most luxury groups from Burberry to LVMH have stormed back, aided by soaring demand in emerging markets.
The sector posted 6.2 per cent growth in the past two years, as 3.4 million more consumers shopped at the premium end of the market.
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