M RahmanPESTEL analysis of the fashion retail industry in the UK
This is a detailed PESTEL analysis of the fashion retail industry in the UK. It aims to explore how some of the political, economic, social, technological, environmental, and legal factors influence the UK fashion retail industry.
Clothing has always been a big business in the UK. In fact, when the direct, indirect, induced, and ‘spill over’ effects are taken into account, the fashion industry contributes approximately £37 billion to the country’s economy (British Fashion Council, 2023).
Political factors affecting the fashion retail industry in the UK
The fashion retail industry in the UK has a global reputation. However, the recent lockdown and economic challenges (high inflation/cost of living) have hit it very hard. Therefore, the industry has called for more financial support from the government. Without substantial support from the government, half of the industry may risk of walking into an unsustainable future.
Political stability in the UK has impacted on its fashion industry very positively. However, Brexit uncertainty has been a cause of concerns for many. The UK imports approximately £10 billion worth of clothes and shoes from Europe each year. Therefore, it needs very good trade relations with the EU for the continuing success of the industry.
Many politicians and political commentators influence the UK’s fashion industry. What they wear and how they wear influence the behaviour of many consumers. However, it is worth noting that clothing may sometimes go beyond the idea of ‘fashion’ and be used to express political statements.
Economic factors affecting the fashion retail industry in the UK
Economic environment is a key area of discussion in this PESTEL analysis of the fashion retail industry in the UK. Clothing manufacturing is expensive in the UK. Therefore, many retail giants produce their fashion items in countries such as Bangladesh, India, Sri Lanka, Turkey, and China.
Manufacturing items aboard helps retailers reduce the production cost and sell them at affordable prices. However, it does not mean that all retailers sell their products cheap. Their pricing strategies are usually in line with the socio-economic circumstances of the target audience.
Armani, Next, Gap, Gucci, and Zara are expensive compared to Primark and Sports Direct. This shows that the UK customers have a variety of options depending on their economic circumstances, when it comes to addressing their fashion needs and desires. In fact, fast-fashion retail chain Primark is doing fantastic as it caters for the needs of people who have budget limitations.
The performance of the economy can have a direct impact on consumer spending, which in turn can have a significant effect on the success of fashion retailers. Factors such as inflation, interest rates, and unemployment can all have a significant effect on consumer spending.
In addition, changes in the exchange rate can also have a major impact on the industry. For example, a weak pound can make imports more expensive, which can lead to higher prices for consumers.
Fashion products are entirely different from food products. Therefore, recession and similar economic difficulties affect fashion retailers badly. However, it is also true that the fashion industry adapts quickly to any change of circumstance.
Social factors affecting the fashion retail industry in the UK
The UK fashion industry directly employ well over 816,000 people. It has also created opportunities for a range of professionals e.g. fashion designers, fashion magazine publishers, journalists, fashion marketeers, fashion academics, and fashion consultants. This shows that the scope of this industry is massive that covers different walks of life in the society (British Fashion Council, 2023).
There are a good number of colleges and universities in the UK that prepare the fashion designers for tomorrow. Unsurprisingly, British nationals are in the leading positions of some of the most famous brands in the world.
Likewise, a number of fashion events e.g. London Fashion Week, the Curve Fashion Festival, Glamour Beauty Festival London, and Manchester Fashion Week attract thousands of people from all over the world for shopping, catwalks, celebrity talks, and much more.
Many people in the UK are heavy buyers of fashion products. No doubt that fast fashion dominates their buying habits. However, some studies suggest that more than 80% buyers buy clothes that they never wear. While it is fantastic for fashion companies, it is not good for the environment.
Changes in consumer spending habits can also have a major effect on the fashion retail industry. For example, the increased popularity of online shopping has had a major impact on the industry as it has changed the way consumers shop. Many brick and mortar retailers have already gone out of business.
The increase in the number of fashion-conscious consumers, especially millennials, will lead to a rise in demand for fashion products and services. Particularly, the rise in popularity of athleisure and sports apparel has been a key trend affecting the UK fashion industry over recent years.
However, the athleisure trend may decline in the future, as and when consumers shift their preferences towards more luxurious products. Change in consumer behaviour is a common phenomenon.
Technological factors affecting the fashion retail industry in the UK
Technological environment is another important area of discussion in this PESTEL analysis of the fashion retail industry in the UK. There is no doubt that more and more people are shopping online. Most of the fashion giants now have their e-commerce sites.
Amazon, eBay, Debenhams, and Next are doing great online, while boohoo.com, misguided.co.uk, prettylittlething.com, and many others are steadily becoming household names. A number of small retailers are indeed doing really well.
While it is difficult to establish a fashion brand name in the UK, e-commerce sites such as Amazon and eBay provide anyone with open opportunities to sell anything online. Many people have achieved financial freedoms by trading on Amazon and eBay.
However, it is worth mentioning that competition is extremely fierce in the online segment of the UK fashion industry. Consequently, several retailers of different size have already gone into administration.
Environmental factors affecting the fashion retail industry in the UK
According to the UN (cited in Dottle and Gu, 2022) the fashion industry is responsible for around 10% of global greenhouse gas emissions. This industry consumes more energy than the combined consumption of international aviation and shipping industries. This is really concerning for the UK, as 80% buyers buy clothes that they never wear.
The UK shoppers purchase more clothes than any other country in Europe. They are also responsible for sending around 300,000 tons of clothes a year to burning or landfills. Therefore, campaign groups are urging the government to put pressure on fashion companies to take more responsibility and contribute to environmental sustainability.
Legal factors affecting the fashion retail industry in the UK
The legal environment is the last item in this PESTEL analysis of the fashion retail industry in the UK. The fashion retail industry must adhere to the country’s rules and regulations set for the industry. Due to strict rules and costs, many companies have outsourced some of their operations abroad. While this saves costs for companies, many customers do not like it at all.
Butler (2022) reports that fashion brands that make misleading claims about their environmental credentials are targeted by the Competition and Markets Authority (CMA). Brands may be sued if they breached consumer protection law with false environmental claims.
Summary of the PESTEL analysis of the fashion retail industry in the UK
To sum-up, the UK fashion retail industry is worth multi-billion-pound. It has been experiencing tremendous growth over the past several years. It is a big contributor to the UK economy and has been a major driver of innovation and creativity. However, there are numerous factors that can have a significant effect on its success.
The fashion industry in the UK is a very competitive one. To succeed in this industry requires much more than just a marketing plan. Companies need to have a detailed understanding of the macro trends affecting their specific niche at any given time, as well as how their competitors are dealing with those trends.
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Last update: 25 January 2023
References:
British Fashion Council (2023) Value of Fashion Report, available at: https://www.britishfashioncouncil.co.uk/news_detail.aspx?ID=228 (accessed 25 January 2023)
Butler, S. (2022) Dirty greenwashing: watchdog targets fashion brands over misleading claims, available at: https://www.theguardian.com/business/2022/jan/14/dirty-greenwashing-watchdog-targets-fashion-brands-over-misleading-claims (accessed 14 July 2022)
Dottle, R. & Gu, J. (2022) The global glut of clothing is an environmental crisis, available at: https://www.bloomberg.com/graphics/2022-fashion-industry-environmental-impact/ (accessed 12 July 2022)
Author: M Rahman
M Rahman writes extensively online and offline with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.
