Sector Insight: Underwear retailing - Form and function fuel sales

The 90s might have been the decade of the Wonderbra and welcoming cleavages, but more recently the attention has shifted to tucking it all away with body control underwear.

The modern-day take on corsets has seen the Spanx phenomenon sweep the UK, as women strive to mould themselves into the perfect shape. Whether this amounts to liberation or torture is a moot point.

Despite this, UK shoppers are generally reluctant to invest in their less visible attire. Even high-profile, celebrity-endorsed underwear ranges and up-market brands have found it hard to tempt women to trade up from their greying, mismatched bras and pants.

TGI data found that 60% of women buy underwear only when it needs replacing. Most adopt a functional approach, with only about a third buying it for special occasions, and a similar percentage buying matching sets.

There has been a small but steady rise in sales of underwear as a whole (including men and women's, but not children's) and the market reached a value of £3.3bn in 2007. Women's sales rose by 2.6% last year, according to Mintel, with sales of bras and pants rising 17% between 2002 and 2007.

Retailers' focus has been on keeping prices low to boost volume, and this has led to deflation in the market. The rise of value retailers such as Primark and Matalan, along with supermarkets' unerring push into non-food areas, has further exacerbated this.

However, some have observed that many women are opting for quality over quantity in the sector. The rise in shoppers' ethical awareness has also led some to question how it is possible for value retailers to sell items so cheaply, and where the cost really lies.

Whether it is due to obesity, better fitting or cosmetic surgery, bras with bigger (D+) cup sizes have experienced particularly strong growth. Brands such as Bravissimo, with marketing that emphasises the benefits of being 'big-boobed' have been at the forefront of the trend for sexy underwear aimed at those with bigger busts.

Sales of hosiery have also improved, driven by the trend for coloured and patterned tights, and the fashion for shorter skirts.

The underwear retail market is highly competitive, and dominated by own-label. It is essentially split between specialist and non-specialist stores. Overall, Marks & Spencer continues to lead the pack, accounting for almost half the value share of the market, with Primark and Tesco following. Each appeals to different demographics: M&S attracts the older and affluent, Primark the younger, and Tesco those with families. Many clothing retailers such as Top Shop, Next and Dorothy Perkins also stock women's underwear ranges.

M&S' broad appeal puts it in an enviable position. Many of its sub-brands such as Per Una and Autograph also have a presence in lingerie, and it has products in all price categories. It has also been at the forefront of innovation, offering fabrics such as machine-washable silk, seamless knickers and Bodysensor and ladder-resistant hosiery.

Among the specialists, La Senza, which entered the UK market in 1994, is expanding its stores and has introduced men's and maternity categories. Privately owned Bravissimo has also performed strongly over the past five years, and now has 14 UK outlets.

Women's common frustration with trawling through racks of bras in search of the correct size has helped online sales. Companies such as Figleaves.com have established themselves as convenient online options, although the absence of fitting rooms and measurement services remains a sticking point.

Figleaves.com is also expanding its men's range, and has introduced an eco-friendly 'Greenleaves' line aimed at ethically-aware customers.

Lingerie is traditionally viewed as a popular gift item for men to buy their wife or girlfriend, but GfK NOP research indicates that women are far more likely to buy underwear for themselves than to receive it from their partners. Indeed, it is more often the case that women buy underwear for men. Navigating the minefield of getting the right size and style, and embarrassment about being seen lingering in lingerie departments, seems to deter many men.

The ageing population could create opportunities in this market, especially as many in this group are affluent and maintain a keen interest in looking good. Almost three in 10 women over the age of 65 say they have not bought a bra in the past year, so if brands and retailers can find a way to appeal to this age group, there is certainly room for growth. It is also an area that may become more important as the proportion of 15- to 24-year-olds declines.

By 2013, the market for adult underwear is predicted to have reached £3.7bn, according to Mintel. Of this total, women's underwear will account for £2.9bn, and men's £792m. This equates to 11% growth at current prices. However, when the effects of price deflation are taken into consideration, real growth over the next five years will be about 17%.

SALES OF ADULT UNDERWEAR BY VALUE AND GROWTH

Women's % annual Men's % annual Total % annual
pounds m growth pounds m growth pounds m growth

2008
(forecast) 2600 2.8 773 0.7 3373 2.3
2007 2530 2.6 768 0.9 3298 2.2
2006 2466 3.0 761 - 3227 2.2
2005 2395 2.8 761 -2.4 3156 1.5
2004 2330 2.5 780 -2.5 3110 1.2
2003 2274 2.2 800 0.8 3074 1.8
2002 2225 - 794 - 3019 -

Source: Mintel
Includes nightwear


DISTRIBUTION CHANNELS OF BRAS AND PANTS BY VALUE SALES AND SHARE

2007 2005 2003 % chng
pounds m % pounds m % pounds m % 2003-07

Variety stores 424 34.8 420 35.8 401 36.6 5.7
M&S 361 29.6 352 30.0 332 30.3 8.7
Bhs 55 4.5 59 5.0 58 5.3 -5.2
Others 8 0.7 9 0.8 11 1.0 -27.3
Clothing multiples 162 13.3 153 13.0 131 12.0 23.7
Department stores 105 8.6 101 8.5 93 8.5 12.9
Debenhams 67 5.5 65 5.5 44 4.0 52.2
John Lewis 21 1.7 18 1.5 13 1.2 61.5
House of Fraser 17 1.4 18 1.5 15 1.4 13.4
Value chains 189 15.5 176 15.0 158 14.4 19.6
Primark 65 5.3 48 4.1 35 3.2 85.7
Matalan 62 5.2 65 5.5 59 5.4 5.1
Peacocks 36 3.0 34 2.9 22 2.0 56.5
Others 26 2.1 29 2.5 42 4.0 -38.0
Supermarkets 110 9.0 98 8.3 80 7.3 37.5
Asda 65 5.3 61 5.2 52 4.8 25.0
Tesco 45 3.7 36 3.1 21 1.9 114.3
Specialists 161 13.2 153 13.0 131 12.0 22.9
Mail order/internet 60 4.9 63 5.4 79 7.2 -24.0
Market stalls 8 0.7 12 1.0 22 2.0 -63.3
Total 1219 100 1174 100 1095 100 11.3

Source: Mintel
Data may not equal totals due to rounding
Base: 2053 adults aged 16+

ANALYST COMMENT - ADELE KENT-LEMON, RESEARCH EXECUTIVE, HPI RESEARCH

Not so long ago, lingerie was either designed for functionality, or in a slightly tacky, Benny Hill, 'slap-and-tickle' style that brought to mind the suburban horror of Ann Summers parties. There was little choice, and even less glamour.

Today, the sector is characterised by fierce competition, an array of brands and a resurgent, robust mainstream. Women are buying more lingerie and, thanks to stores such as Primark at the market's entry level, at lower prices. M&S has also contributed to a strong core of keenly priced offerings.

The role of M&S in the sector's health is hugely significant. The retailer has always been a mainstay for both men's and women's underwear, but lingerie has played a key role in its recovery.

The media has also boosted the sector, with Gok Wan the latest guru to proffer advice on making the best use of our natural assets.

Online, brands such as Figleaves.com have provided a way for women to be more daring with their choices, and men to avoid the intimidating experience of buying in-store.

In fact, intimidation may also be a significant factor for women. Research indicates that Agent Provocateur, for example, is a little too daunting for some shoppers, and the internet provides a more comfortable experience.

One aspect for future consideration is the changing shape of women. The market for bigger sizes is growing, and the increasing popularity of cosmetic surgery is among the factors indicating that this trend will continue.

Finally, as growth at the luxury end of the market is checked by the credit crunch, retailers offering affordable, quality underwear look set to benefit.