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Market analysis - market share (introduction)

Author: Jim Riley  Last updated: Sunday 23 September, 2012

Definition

Market share can be defined as the percentage of all sales within a market that is held by one brand / product or company.  Market share can be measured in several ways.  However, the two most important measures are by:

- Sales revenue

- Sales volume (the number of units sold)

Examples of market share

Market share information on the UK clothing retail market is summarised below:

The UK clothing market, as defined by Deutsche Bank in their recent report, is valued at £26.9 billion.  It is one of the most concentrated retail markets in Europe, with the top ten retailers accounting for some 42% of the market.

What is market concentration?  It is the proportion of market value that is owned by the leading brands or products/companies in the market.  Where the market leaders own a large part of the overall market, the market is said to be highly concentrated.  By contrast, where the market leader has a relatively small market share and there are many other competitors, a market is said to be "fragmented"

There has been little change in the concentration of the UK clothing retail market in recent years.  The top 10 retailers accounted for 39% of the market in 1995.  However, as the table below illustrates, the composition of the top 10 has changed quite considerably, with only six of the top ten in 1995 remaining in the top league in 2002:

The table above masks the change in the format of retail businesses that have evolved in the UK over recent years.  Five years ago, the value or "discount" retailers had a relatively small share of the clothing market, accounting for only 18% total market share.  Today the market is very different.  The value or discount retailers now have over a quarter of the market.  Foreign clothing retailers have also penetrated the market (e.g. the Gap, H&M and Zara) although their total market share is still less than 5%.

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