Key Note estimates that sales of clothing in the UK reached £27.95bn in 1999, an increase of 23.7% by value over 1994. UK manufacturers’ sales decreased by 16.6% between 1995 and 1998 to £6.43bn. 73.6% of domestic demand was met by imports, as the negative balance of trade has more than doubled since 1994, to reach £4.97bn in 1999, due to the strengthening of the pound and the increasingly uncompetitive financial structure of the UK industry.
The largest single clothing retailer in the UK, Marks and Spencer, caused shockwaves through the industry in September 1999 when it announced that it would no longer seek to source the majority of its clothing from the UK, and terminated agreements with several of its largest suppliers without notice. By the beginning of 2000, this had already resulted in the closure of several major factories in the UK and the loss of several thousand jobs. Weakness in the UK industry can also be seen in the agreed bid for Courtaulds by Sara Lee Europe, which took the company over in March 2000 after several years of declining sales and profitability. Several clothing retail companies have suspended their UK manufacturing activities, notably Alexandra and Berghaus, while Dawson International, once the major supplier of added-value woollen knitwear, has now downsized to cashmere only.
The future for the UK industry is probably the bleakest it has ever been. The low-skill, low added-value nature of much clothing manufacture means that labour costs are a high proportion of the business, making it very difficult for the UK to compete with lower labour cost countries in Eastern Europe, North Africa and Asia. A downturn in fashion sales in 1998 and 1999 hit UK retailers hard, in turn increasing their cost pressures and leading more to source from outside the UK. Total retail sales are expected to reach £30.36bn by 2004. UK manufacturers’ sales are anticipated to fall by 28.5% over the same period to £4.16bn, leaving a residual industry which has