Britain’s fashion retailers

From culottes to “cold shoulder” tops and woven loafers last seen in Miami Vice, many Britons have struggled with this summer’s fashions, but now there is an even more unpalatable trend on the horizon – in the shape of higher prices.

Britain’s fashion retailers

The devaluation of sterling following the June Brexit vote has had major ramifications for store chiefs who pay in dollars for large quantities of imported goods. The first indication of where prices could be heading came last week from Next, one of the UK’s biggest clothing retailers, which pencilled in increases of up to 5% in 2017.

“We have always taken the view that if our costs go up, our selling prices will go up,” said Next chief executive Lord Wolfson.

But fashion retailers are already struggling to persuade shoppers to part with their cash as weak wage growth is compounded by a cyclical shift towards spending on eating out and other leisure activities. “Fashion has been the worst-performing sector in retail this year by a clear margin,” says Richard Lim, chief executive of Retail Economics. “Growth in earnings has not fed through into retail sales, and clothing has borne the brunt of that. There’s also an ‘age of abundance’ thing going on ...people have got to the point of near-saturation with a lot of things.”

According to Kantar Worldpanel, spending on clothes, shoes and accessories contracted slightly, by 0.1%, in the year to 5 June – the first time the £36bn fashion market has declined in almost seven years. Adding to the gloom, a poll in July by market researcher GfK recorded the biggest slide in consumer confidence for more than 26 years. Its confidence index was at -12, from -1 in its June survey, carried out before the referendum. That was the sharpest month-to-month drop since March 1990, shortly before the UK fell into recession.