Dedicated followers of fashion
As French Connection plunges into the red and Next's high street outlets are expected to follow (saved only by catalogue and internet sales), fashion retailers on the high street are scrabbling for market share in a zero growth environment.
Sales in high street fashion are forecast to grow at 2% this year but the retail consultancy Verdict is predicting only an average 0.1% growth over the next 5 years. Also retail overheads are growing at 4% per annum due to higher rents, the minimum wage and soaring utility bills. The continuing threat from the internet is also putting pressure of bricks and mortar outlets and interest rates are widely predicted to increase next month as inflation tops 2.5%.
Only John Lewis bucked the trend with a whopping 25% increase in turnover and even here the internet has overtaken its flagship Oxford Street store as its largest single source of income.
Next's mail order and Internet division, Next Directory, may be the company's saving grace this year. Next has struggled with disappointing returns on the high street. However thanks to the mail order side of the business not all is lost. Indeed, shares have risen 55p to £17.60 on better than expected first half pre-tax profits.
The Internet is where the money is being made now and, believe it or not, clothing is one of the fastest growing sectors of e-commerce.