Mosaic Fashions - which owns several high street chains, including Oasis, Whistles and Karen Millen - and Rubicon, owner of Principles, Warehouse and The Shoe Studio, are set to merge in a£353 million deal.
The consolidated fashion multiple will command a 3.8 per cent market share, behind Marks & Spencer (12 per cent), Arcadia (9.2 per cent) and Next (7.3 per cent).
According to the study, UK Fashion Multiples 2006, the planned merger is indicative of the new wave of strategies being adopted by fashion players to gain market share.
Verdict research analyst Maureen Hinton said that retailers can no longer rely on space-led expansion to drive growth. Instead, fashion multiples are using other methods such as mergers, the fragmentation of portfolios, new distribution channels and heightened brand awareness to build their businesses.
The report maintains that, by adopting a multi-brand model, fashion retailers will grow without saturating their brand or becoming ubiquitous.
New concepts or fascias are, according to the findings, a low-risk way of growing business. H&M and its new premium concept and Inditex, with Zara, Bershka and Pull & Bear, are fostering new growth with 'key economies of scale and mitigation of risk'.
Extending existing brands by increasing high density lines such as footwear and accessories is also proving popular, along with new routes to markets including concessions, international franchises and e-commerce development.
All of these strategies help spread risk across different concepts, product categories and locations, according to Verdict.
Finally, the report highlights the importance of leveraging brand authority as the market becomes increasingly crowded. Ranges with distinctive handwriting such as Topshop Unique help differentiate the brand and justify higher-end pricing architecture.