What are the opportunities for modest fashion in the United Kingdom?

Photo: LONDON, UK, OCTOBER 30, 2015: Oxford Street during sale season / Alice-photo / Shutterstock.com

Consumers in the United Kingdom spent $105 billion on apparel and footwear in 2015. About 4 percent, or $4.2 billion, of this total was spent on apparel and footwear by just over 3 million resident Muslims.

With the emergence of several UK-based modest fashion players, including Aab and Barjis London, and an expected increase in expenditure by Muslims on apparel, what are the opportunities for new players to enter the UK’s modest fashion market?

Consumers in the United Kingdom spent an estimated $105 billion on clothing and footwear in 2015, according to Mintel and national statistics. This represents a cumulative annual growth rate (CAGR) of 5 percent from 2010, when the total expenditure was $80 billion.

The growth of the UK’s fashion industry has been driven by the rise in consumer demand, world-renowned designers, digital e-commerce platforms amongst luxury brands, and the diversification of retail channels. Online commerce is becoming an increasingly important channel, accounting for 15 percent of the country’s total fashion sales in 2014, according to a  report by Mintel.

KEY MARKET PLAYERS

The fashion and clothing market in the UK is highly competitive, and there are a number of key players most notably among luxury brands and fast-fashion retailers.

Among the luxury brands based out of the UK, Burberry, Mulberry, and Alexander McQueen are the largest.

Burberry earned over $3.5 billion in revenues in 2015. The company currently has 214 mainline retail stores, 213 concessions within department stores, and 57 outlets, as well as a digital commerce platform.

Mulberry raked in over $94.3 million in revenues in 2015. The company had 122 stores as of 2015 and has expanded internationally in the past three years, according to its annual report.

In the fast fashion segment, key players include Marks & Spencer, Primark, Next, and Arcadia Group, the company behind high street names Burston Menswear, Dorothy Perkins, Evans, Miss Selfridge, Outfit, Topshop, Topman, and Wallis.

Marks & Spencer is a fast-fashion retailer with $14.3 billion in revenues in 2015. As of the same year, it had over 1,330 stores worldwide and over 852 stores in the UK itself, with over 82,000 employees.

Primark, an Associated British Foods subsidiary had over $7.4 billion in revenues in 2015 and is expanding its international presence by opening stores in Belgium, Germany, the Netherlands and the United States . Primark currently has 293 stores and employs over 61,000 people in the UK.

MODEST FASHION OPPORTUNITY

Muslims living in the UK are estimated to have spent $4 billion on apparel, including footwear, in 2014, with this expenditure expected to increase by 6 percent cumulative annual growth rate (CAGR) through 2020. Applying this growth rate would imply $4.2 billion in Muslim spend in 2015.

There is a robust demand among UK-based Muslims for modest clothing, in particular among women.  A large number of new, small players have entered the market to address this need.

An increasing number of Islamic modest fashion labels and designers have been launched in the UK. Notable examples include e-commerce retailer Aab, which has just opened a second store in the country, and Barjis London, a high-fashion modest clothing brand created by designer Barjis Chohan, a Central Saint Martins graduate and Vivienne Westwood protégée.

Commenting on the current landscape, Altaf Alim, Commercial Director of Aab, said, “Predominantly this [market] is online. There are a large number of small players entering the market, and [being] online offers a low barrier to entry compared to the high capital and labor costs of opening a physical store.”

Broader industry awareness is growing, with several annual events organized by events company Saverah, such as the annual Urban Muslim Woman Show and the Saverah Women Expo. The latter has been held for five years, implying consistent demand for such events.

With momentum building, mainstream retailers have started to realize the significance of catering to the Muslim market and some have started to stock Islamic modest clothing.

Harrods  has carried luxury abayas from Emirati fashion house DAS Collection, retail chain John Lewis has offered hijabs in its school uniform department since 2014. House of Fraser and Marks & Spencer started to stock modest sportswear in 2015 and early 2016, respectively. Luxury department store Liberty London has collaborated with Dina Torkia to promote the latter’s scarf collection.

CHALLENGES AND CONSIDERATIONS

Given a good ecosystem comprising marketing events, Muslim fashion designers, trend influencers, as well as an advantageous proximity to the European and Gulf markets, the UK has strong potential to become a trend center for Islamic modest fashion.

However, with mainstream retailers entering the market and the low costs of entry attracting new players, competition is intense.

“At the lower end of the market is an influx of new brands/sellers only selling online and mainly promoted through social media. Most of these businesses are run from home and are mainly price-driven,” explained Aab’s Altaf Alim.

“At the other end of the spectrum are the more established brands [that] want to scale—for example, opening physical stores—and the main issue here are the costs (rents, service charges, etc.) and in addition [the] potential challenge of high street brands entering the market. It’s clear that they are starting to realize the opportunity, and it would be very difficult to compete with them based on the resources they have,” Alim added.

To remain differentiated, designers and brands must leverage social media to engage with customers and seek to address unmet needs.

Expanding into new markets can also help brands scale faster. For instance, Aab sells globally and wants to increase its presence in Muslim-majority countries, according to a recent case study on the company.

Further, for brands to establish credibility and compete effectively with mainstream competitors, opening a physical store is a key step.

There are a few success stories here: SHUKR was able to open its first store in 2010 after it launched online in 2001. Aab launched its first store in 2015 after it launched online in 2007.

While it may take time, a key interim step is establishing distribution in retail stores and leveraging key industry events held in the country. To compete effectively in the UK market, modest fashion brands also need to have an international focus, and address international markets.

© SalamGateway.com 2016