A cold, overcast afternoon in Hammersmith and the dishevelled down-and-out knows exactly where he's heading. Moving purposefully past Marks & Spencer, he shuffles a few doors down the main shopping drag in King Street, placing his sleeping bag and plastic cup on the pavement outside TK Maxx. He probably doesn't have a view on the relative merits of the two retailers, but he certainly knows where the crowds are heading. With any luck, they'll be in a charitable mood after snapping up bargains at the cut-price designer chain.
The store frontage is not much to look at. There are no fancy window displays; in fact, there's no merchandise at all, just a set of up and down escalators that take customers to and from the first- floor shop. But those escalators are packed. And upstairs it is heaving with people picking their way through rails overflowing with clothes. To some, it looks just like a messy pile-'em-high, sell-'em-cheap discount warehouse. But to those in the know, TK Maxx is a secret treasure trove of designer labels at hugely discounted prices.
How about a Pringle 'hoody' in fashionable baby blue, down from £83 to £34.99? Or a Fenn Wright Manson black polka-dot jacket, slashed from £225 to £45? There's Burberry, Barbour and Armani; Levi, Versace and Prada; Calvin Klein, Dolce & Gabbana and DKNY. This, truly, is designer heaven.
Agreed, it's not what you could call a sophisticated shopping experience, but there are big bargains to be had for those prepared to look. And, increasingly, shoppers are prepared to take the time to seek out true bargains.
The success of TK Maxx, along with the growth of retailers such as Matalan, Primark, Peacocks and George at Asda, are behind a huge expansion of the so-called 'value' retail market in recent years. According to retail research firm Verdict, the value segment climbed to £6.3 billion last year, representing 18% of the overall clothing market.
Consistently producing double-digit gains, it has been the fastest-growing sector for the past decade, with its near 13% leap in 2004 compared with growth of just 4.1% in the overall clothing market. By 2009, value retailers will have pushed their sales through £10 billion, predicts Verdict, meaning that £1 in every £4 spent on clothing in Britain will go into the tills of a value retailer.
Why are they doing so well? A stroll back across Hammersmith's King Street, where the once-mighty Marks & Spencer trades near a branch of Primark, provides some of the answers. TK Maxx is busy, but Primark is busier still.
And it's easy to see why: in the window are mannequins in party tops for £8, twinned with black trousers at just £10.
Inside, a sexy purple and fuscia basque-and-briefs set, which wouldn't look out of place in Agent Provocateur, can be yours for £8. For the family, there are fleeces at £4 and men's coats for £25. The tills are buzzing.
Primark's prices are so low, there's simply no comparison with M&S. It carries nowhere near the range of its more established high street rival, but in terms of quality on basic items it's hard to tell the difference between an M&S fleece and one a fraction of the price at Primark.
'How do you sell it so cheaply is the question I'm asked more than any other,' says Geoff Lancaster, head of external affairs for Primark's parent company, Associated British Foods (ABF). 'And it's a very simple answer: we buy a lot of stuff, we buy it direct without the middleman, and we do not have the costs that other retailers such as M&S have.
'We don't have a glossy headquarters,' he continues. 'Instead, we've got offices above a shop in Dublin and in Reading. Nor do we spend on advertising; it's word-of-mouth. But we are not cheapskates when it comes to distribution; we've invested heavily in logistics.'
Primark has been hidden away in ABF's Twinings-tea-to-Sunblest-bread empire, and its management team prefers to keep a low profile, refusing all interview requests. In total, ABF has poured £250 million into Primark over the past five years and is desperately keen to expand the 120-store chain. Says Lancaster: 'We haven't put a limit on the number of stores. We're still not in Liverpool, for example, and we're certainly not held back by resources, more the lack of availability of the right high street sites.'
With a growth rate three times that of the rest of the clothing sector, it's no wonder retailers are flocking to satisfy the consumer's demand for value. Value stores have been around for decades - Matalan is 20 years old this year - but the rapid growth in recent years means the sector has now come of age.
Although Matalan was first in, the unrivalled leader of the value market, according to Verdict, is George, the clothing label created by former Next chief executive George Davies for Asda. When it was first launched in 1990, George introduced a receptive British public to the entirely new concept of buying clothing along with the weekly grocery shopping.
Other supermarkets followed, notably the mighty Tesco, which claims its Cherokee, Florence and Fred ranges are now the fastest-growing brands in the clothing industry.
From its £4 jeans to catwalk-inspired 'fast fashion', George now offers a full range of clothing for the family. It is testing a handful of standalone high street shops and George is also a key feature of the supermarket group's new Asda Living concept.
Opened last October, the Asda Living store in Walsall offers everything from DVD players to jewellery and toys, along with the full George range.
What it does not sell is food, and the absence of any groceries on the Asda Living shelves has sparked speculation that the group would be interested in bidding for Matalan as a quick-hit way of rolling out the Living concept.
Although Andy Bond, Asda's chief operating officer and head of George Global, declines to comment on that, he expresses admiration for Matalan.
'It's been around a long time and it's one of the benchmarks of value retailing. The stores look better and it's doing a pretty good job at the moment.'
He's also an admirer of Primark and its rock-bottom prices, but points to George's much wider range. 'I'm not going to criticise any of the value retailers,' he adds. 'Between us, we've achieved a revolution in shopping over the past 10 years. The price deflation we've pushed through in clothing has even forced down the overall rate of inflation, which is pretty major stuff.'
A combination of George and Matalan would create a powerful player not only at the value end but also in the overall clothing market. According to Verdict's figures, George is the leading value player with a 19% share, followed by Matalan with nearly 15%.
Matalan chief executive John King dismisses any takeover talk, preferring to explain how the group is recovering from its self-inflicted wounds of a couple of years ago, when it allowed prices to drift and its ranges to become unfashionable. It is now back on track and King is confident of further growth. 'Value retailers have 18% of the market here, but in the US it is 35%; there's plenty to go for.'
He refuses to be intimidated by the might of the supermarkets. 'They are aimed at frequent shoppers. We are not in that market, we are a destination shop. We can live with the supermarkets.' For Matalan, he says, 'it's all about product. If consumers don't want something, they won't buy it at any price. The market has become more sophisticated.'
Quality in the value sector has improved markedly in recent years. King points to what he's wearing himself - a £65 suit that can be put in the wash. 'It's half the price of Marks & Spencer and better quality. We know that, because we had it tested at Manchester university,' he says proudly.
Brands are not particularly important to Matalan, although it has dabbled with Miss Sixty and Diesel. 'People like our own brands because they like the quality, style and price. There's much less snobbery around in clothing now - and rich people like a bargain as much as everyone else.'
Verdict splits the value market into four sections, and both Matalan and George come within the Family Value category, which is by far the largest. Then there's the Price-led category, taking in Primark, followed by Fashion Value for the likes of New Look and MK One. The smallest sector, perhaps surprisingly, is the traditional discounting segment, which relies on an endless oversupply of branded product to stock its rails.
But, says Verdict, with the advent of the internet and factory outlets, the supply of products is becoming severely restricted: 'There is room for only one winner in this segment and it will be TK Maxx.' Like George, which is able to use the huge buying power of its parent Wal-Mart, TK Maxx is backed by a powerful American group, TJX Companies Inc.
Founded in the US in 1976 and now trading from more than 2,000 stores, TJX is the world's largest so-called off-price retailer, with annual sales of more than $13 billion. Its buying power is legendary, and the British TK Maxx subsidiary, set up 10 years ago, takes full advantage of the price leverage. It's the off-price concept - in which designer brands are sold at a huge discount to their normal prices - that sets TK Maxx apart from the rest of the value sector.
Although Matalan and Primark, for example, offer a handful of known names - Lee, Falmers and Wolsey at Matalan and LA Gear and Dunlop at Primark - they are substantially own-label retailers. TK Maxx, on the other hand, is wall-to-wall designer gear for a fraction of the usual retail price.
Like others in the sector, it keeps its costs low with little in the way of merchandising or advertising, although, as its fame has spread among the more well-heeled shopper in recent years, it has started advertising in magazines such as Heat and the Sunday Times Style supplement.
Deborah Dolce, marketing director of TK Maxx, explains its success: 'The core concept is very simple - great stuff at great prices. And the way in which we deliver this is through our opportunistic buying policy, along with our cost-effectiveness. The concept relies on our ability to shift stock daily.'
TK Maxx attracts shoppers from all age groups and across the social spectrum, says Dolce, but as many as two-thirds of its customers are in the ABC1 category. 'Our customers are mixed, but what unites them is their attitude. They are brand sophisticates and they like to shop smart.'
While traditional department stores stick perhaps to a few hundred brands, TK Maxx stocks thousands. Its stores get daily deliveries, sometimes twice a day, and the low-margin/high-volume business model depends on those stocks being shifted.
A product will last six weeks on the rail; if it has not been sold by then, the price is slashed even further and it goes to the clearance section.
The buyers at TK Maxx are crucial. 'We have a team of more than 80 buyers who source direct from suppliers,' explains Dolce. 'They are empowered to make decisions on the spot and have the flexibility to buy anything from a handful to a few thousand items. It doesn't matter if they buy unique items; they can go into a single shop.'
To keep costs low, the chain does not take prime sites, but its outlets are split roughly between high streets, shopping centres and out-of-town.
It has had £100 million of investment from its American parent over the past 10 years and now trades from about 170 outlets. Ultimately, Dolce sees this expanding to more than 300.
With the rapid expansion of TK Maxx and the rest of the value sector, it is not difficult to see who is suffering - and a stroll down King Street would tell the tale even if M&S's recent dismal performance didn't. Over the past decade, M&S has effectively handed over a huge chunk of its business to the value sector. With UK clothing sales of £3.4 billion, its buying power far exceeds that of companies such as Matalan and Primark, but it allowed legions of middlemen to take their cut and failed to force suppliers to reduce their prices.
At the same time, it made the mistake of thinking that its customers were not interested in fast fashion (they are) and that its 40-plus female customers wanted to look middle-aged (they don't). Chief executive Stuart Rose is addressing all these issues, but according to Asda's Bond, he's got an extraordinarily difficult job. 'There has been a step change in the market, and I don't think M&S will ever grow its share back to what it once was.'
As the value retailers come of age, a shake-out is inevitable, with the more powerful players expanding by acquiring weaker rivals. They have worked hard to win their customers and, whatever Rose achieves at M&S, they will not be going away.
HOW ASDA'S BOND OUTSMARTED M&S
Four years ago, Andy Bond had the toughest job in British retailing.
George Davies, the creative genius behind the George at Asda clothing range, had resigned and Bond had the daunting task of replacing him.
Still only 39, this grammar school boy from Grantham confounded the sceptics who feared the supermarket brand would fall into decline without the magic touch of Davies. George (the business) has gone from strength to strength, last year overtaking Marks & Spencer as Britain's biggest clothing retailer by volume. So, too, has Bond's career - last September, he was appointed chief operating officer at Wal-Mart subsidiary Asda, in addition to his role as head of George Global.
In the UK alone, George sales are now comfortably over £1 billion, and Bond has ambitious plans for international expansion. He aims to turn George - already available in Canada, the US, Puerto Rica, Mexico, Germany, Korea and Japan - into a truly global brand in the next five years.
An engineer by training, Bond left Salford University with a first-class degree under his belt in 1987. He started out at British Gas, but took an MBA at the Cranfield School of Management in the early 1990s and joined Asda as marketing manager in 1994. He was appointed marketing director four years later, moving on through the group to become European own-label director for Asda and Wal-Mart Germany in 1999. Then Davies departed to work his magic for M&S with the Per Una clothing range, which remains one of the few success stories at the struggling high street chain.
Bond had served his time at the Asda finishing school, which has produced countless managers now working throughout the retail industry, but he was aware of the scale of the challenge - and opportunity - with George.
'A lot of people did wonder what would happen when George Davies left, and I am very proud of what we have achieved since then,' he says. 'Our customers have voted with their wallets.'
The huge buying power of Wal-Mart is a key element in George's ability to keep prices low. 'We have huge leverage in the buying of fabric,' explains Bond. 'And then there's all the zips we buy for our jeans - we use YKK, the best zips in the world, even for our £4 a pair jeans, and we are able to get them at a substantial discount because of Wal-Mart's buying power.'