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Euromonitor International Industry Analysis

Euromonitor International Industry Analysis

Euromonitor Provides Early Access to 2016 Apparel & Footwear Data

Euromonitor International is pleased to announce that the 2016 Apparel and Footwear edition is now live and available to access on Passport. The updated research provides latest insights on how the apparel and footwear industry performed during 2015 and identifies key prospects through to 2020.

KEY RESEARCH HIGHLIGHTS

  1. Fashion driven markets go “fast-fashion”
  2. US$ dollar strengthening erodes margins
  3. Uneven growth within developing markets
  4. Omni-channel becomes the norm
  5. Sportswear keeps outgrowing the overall category 

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Fashion driven markets go “fast-fashion”

Despite early signs of financial recovery, consumers in highly developed markets are still cautious, and pre-crisis purchasing power levels have not been recovered yet. The combination of frugality and rapid expansion of affordable clothing chains (making the most of cheaper retail estate) led the foundations for the entry and the consolidation of “fast-fashion” clothing and footwear operators in key markets. In Western Europe H&M and Zara increased their market share in 2015 while Primark continue its expansion with the opening of new outlets in existing markets and entered the US with the opening of its first outlet in Boston in September 2015. Fast Retailing Co Ltd (Uniqlo) posted the highest growth among the top 10 companies at world level in 2015 with the number of outlets outside of Japan already outnumbering local points of sale.  

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US$ dollar strengthening erodes margins

The strengthening of the US$ put under heavy pressure profit margins in 2015. This issue has been especially critical for operators with a big proportion of their manufacturing facilities located in Southeast Asia. Giants like H&M, which sources up to 80% of its portfolio from Southeast Asian production hubs, has suffered in a greater extent with the strengthening of the greenback. As a result, several operators announced plans to relocate manufacturing facilities closer to key selling markets while looking into African markets like Ethiopia as a solid alternative. With many African markets producing cotton as well, Africa is already a strong contender in the global apparel outsourcing race.  

Uneven growth within developing markets

Developing markets showed varied performance in 2015. Previously promising markets like Brazil or Russia, posted further declines in 2015 as a result of rapidly deteriorating financial environments and political instability. China, posted lower growth compared to 2014, as consumers downgraded to cheaper references. On the other hand, India, which is expected to become 3rd biggest market by 2020, continued posting double digit growth driven by rising disposable incomes and rapid retail expansion with the consequent consumer upgrade from informal to formal retailing. Vietnam deserves special mention as one of the most promising markets moving forward. With a well-established manufacturing infrastructure, a young demographic profile, and one of the fastest growing disposable income rates in the region, Vietnam is set to post the highest CAGR in value terms to 2020 within Asia Pacific.

Omni-channel becomes the norm

Previously seen as “nice to have”, the Omni-channel strategy became mandatory in 2015 as consumers appeal for on-line retailing kept growing and became increasingly sophisticated at global level. Consumers keep embracing both e-commerce and m-commerce, while operators continued opening digital operations in new markets to meet demand. China, Japan and Hong Kong witnessed the launch of digital operations under different Inditex brands in 2015 while H&M is planning to follow the same route in Ireland, Japan, Greece, Croatia, Slovenia, Estonia, Latvia, Lithuania and Luxembourg throughout 2016. Operators keep moving from a purely “transactional” to a more brand image building approach. In the process, competition rises as new players step in. One of the latest includes Style.com, Condé Nast e-commerce venture, expected to launch early 2016 in the UK and right after in the US.

Sportswear keeps outgrowing the overall category

Sportswear remains the best performing segment within the apparel and footwear industry for another consecutive year. Almost a quarter of total value generated by the apparel and footwear industry came from sportswear items in 2015. The blurring line between activewear and fashion is one of the reason behind this success, as an increasing number of smart and smart/casual brands move into sportswear territory. 2015 witnessed the launch of high profile collaborations between Nike and Acronym designer Johanna F. Schneider or adidas and Junichi Abe’s Kolor boosting their fashion appeal beyond its legion of already loyal activewear enthusiasts. The female segment remains a key goal for sportswear operators, and in this line Nike opened its first European female only store in London in May 2015.

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About Euromonitor International

Established in 1972, Euromonitor International is the world leader in strategy research for consumer markets. Comprehensive international coverage and leading edge innovation make Euromonitor's products an essential resource for companies large and small, national and global.

As an independent company, Euromonitor offers unmatched detail and unbiased content for every region, country, category and channel. From socioeconomic context to intimate detail on the smallest products or markets, Euromonitor provides market research and surveys focused on your organisation’s needs.  

For more information, visit www.euromonitor.com/apparel-and-footwear or http://blog.euromonitor.com/category/apparel-and-footwear

Euromonitor International Luxury Market Outlook for 2016

By Fflur Roberts, Head of Luxury for Euromonitor International

The luxury industry has flourished for the past 10 years, but the good times have started to stall and brands are now facing a possible power shift from East to West. Nevertheless, at the same time, connectivity and digital sales will continue to drive new opportunities in digital innovation, with the internet and social media reaching new frontiers.

Our latest data reveal that 2016 will be yet another challenging year for the luxury goods industry. In particular, the economic instability, social unrest, armed conflict, and further threats of terrorist attacks in key luxury shopping destinations will continue to act as a drag on sales, not to mention the turmoil on the global foreign-exchange markets which could create further global currency wars for the industry.

Despite these headwinds, our latest data show that the outlook for the luxury goods industry remains optimistic, with sales set to reach US$328 billion by 2016, having increased from US$317 billion in 2015. The new data also indicates that developed markets are largely outperforming emerging markets and that there is a clear shift in spend from East to West.LOGIN OR CONTACT US FOR INFORMATION ON MEMBERSHIP.

Euromonitor International on the Global Rise of the Showroom Store

By Michelle Malison, Research Analyst for Retailing at Euromonitor International

The rise of e-commerce has raised concerns regarding the role of physical stores for retailers, especially those in the fashion industry. According to Euromonitor International, 10% of apparel and footwear sales globally were made online, up from 4% in 2009. Fashion retailers around the world are experimenting with a new type of store format, the showroom store, to enjoy the benefits of a physical presence without the typical costs.

How do showroom stores operate? 

In the past, shoppers were limited to physical stores to discover and purchase products. Shoppers would walk into a store, explore the range of product offerings, pay, and walk out with the purchased products. At showroom stores, the selling space is small with limited inventory. Shoppers try on products, but there is usually only one size in stock. The shopper receives personalised support from sales associates on fit and then the order for the proper fit or colour is made online.

Retailers typically minimise the selling space, inventory, store design and staff of showroom stores with the goal of utilising these stores primarily to provide customers with another access point to engage with the brand. The lower overhead costs of showroom stores enable fashion retailers to focus spending their resources on developing their brand and relationships with customers in a more efficient manner.

Showroom stores blend the physical with the digital.

The use of showroom stores is attractive to fashion retailers and shoppers alike for several reasons. For retailers, the smaller stores allow for lower overhead costs (real estate, inventory management, labour, etc) and enable them to draw in new shoppers who may not be aware of them, especially if the retailer historically only sold online. Shoppers are able to engage personally with the brand through showroom stores, receiving guidance and support from sales associates, and touch and feel the products in which they are interested, all the while enjoying the convenience of delivery. The showroom store is a unique format that integrates the benefits of both physical and online stores.

E-commerce players move offline.

Fashion retailers which previously operated exclusively online are moving into the physical realm using the showroom store format, illustrating the value of bricks-and-mortar stores to engage with shoppers. For example, Zalora, a fashion retailer that operated exclusively online, opened physical stores in Singapore (2014) and Hong Kong (2015). Instead of standing in line at cash registers and leaving with shopping bags, shoppers are asked to scan a QR code to download the Zalora app to their smartphones using the store’s complimentary Wi-Fi. Customers can examine the limited range of inventory at the store and place an order online using QR codes on the clothing labels. Shoppers leave the store without carrying any purchased products and their order will be delivered to their homes within two to seven days.

In the United States, Bonobos, a chic menswear outlet with a casual and summery positioning, introduced its “Guideshop” format. The shops are intended to introduce customers to the brand’s style via changing booths and knowledgeable sales associates to help familiarise the customer with the brand and its business model. The “Guideshops” only carry one item of each inventory piece with the sales staff creating an online account for the shopper and completing the purchase online for home delivery.

Offline players are also experimenting.

In January 2015, Hervis Sports, a sporting goods and athletic apparel retailer, opened its first Hervis Express store in Austria. The store has a selling space of only about 110 sq ft (compared to typical Hervis stores with an average selling space of approximately 11,000 sq ft) and offers a very limited selection of the retailer’s bestselling products. Shoppers still have access to the whole Hervis range via internet terminals placed within the Hervis Express store and can make purchases and have products delivered.

In the UK, House of Fraser, a department store group with over 60 store locations, has established two “buy & collect” concept stores, one in Cambridge and another in Edinburgh. The stores carry limited inventory and are equipped with tablets for shoppers’ use to browse through its online store and order products, in addition to fitting rooms and sales staff to provide assistance. Orders are delivered to shoppers’ homes or to any House of Fraser’s store for collection.

Other retailers, such as Macy’s and Target, are also experimenting with a similar showroom store format. In spring 2015, Macy’s allocated its swimsuit and workout sections to only display samples in one of its stores in California. Shoppers can utilise an app to have specific products in requested sizes sent to their designated dressing rooms.

In the case of Target, the company turned its patio furniture displays into showrooms in nearly 30 of its stores in Denver. Shoppers check out the products in stores but make purchases online for delivery. The strategy enables Target to carry limited inventory within these stores, and the company is now considering expanding the strategy to additional product categories.

Physical stores will continue to exist and evolve in line with consumers’ demands.

The role of physical stores is changing for fashion retailers in the omnichannel environment. For some fashion brands, having a physical presence is an essential tool for customer acquisition and branding.  The showroom store format allows retailers to enjoy the benefits of a physical presence without all of the costs.  While physical stores will remain under pressure from internet shopping, it is likely that fashion retailers will continue to experiment with store formats to deliver the best experience to their shoppers. 

Established in 1972, Euromonitor International is the world leader in strategy research for consumer markets. Comprehensive international coverage and leading edge innovation make Euromonitor's products an essential resource for companies large and small, national and global.

As an independent company, Euromonitor offers unmatched detail and unbiased content for every region, country, category and channel. From socioeconomic context to intimate detail on the smallest products or markets, Euromonitor provides market research and surveys focused on your organisation’s needs.  

For more information on our partnership or Euromonitor International's offerings, visit our website or contact Chourouk Gorrab, Communications Executive at Euromonitor International, at +44 (0)20 7251 8024 EXT 1357 or This email address is being protected from spambots. You need JavaScript enabled to view it..

Event Preview: New York Times International Luxury Conference 2015, Luxury Beyond Product

What are the geopolitical, economic, and cultural forces shaping the luxury industry and changing the way consumers interact with brands? Why are we seeing declining luxury sales in China and Russia, and what impact does currency have on demand? How can luxury brands become more sustainable? What role do “made in” labels or “smart” products play in luxury brand marketing?  Euromonitor International takes a look ahead of the INYT Luxury Conference.

The International New York Times Luxury Conference 2015, which is hosted and moderated by New York Times fashion director Vanessa Friedman and award-winning New York Times journalists, will addresses some of the most critical challenges and opportunities facing today’s luxury goods industry.

Aptly named Luxury Beyond Product, the event will bring together a select group of brand thought-leaders and innovators from luxury fashion to art, technology, entertainment, beauty and retail to share ideas on the most pertinent issues luxury businesses face in this ever-evolving landscape – joining the International Luxury Conference 2015 event are C.E.O.s Maureen Chiquet of Chanel and Marco Bizzarri of Gucci, icons and celebrities like will.i.am and Victoria Beckham, and unexpected experts such as Doctors Without Borders founder Bernard Kouchner, choreographer Benjamin Millipied, artist Grayson Perry and myriad others.

Below are just some of the thought provoking and highly informative discussions that will take place at The Trianon Palace in Versailles on 17–18 November 2015.

The Global Context

Moderated by Roger Cohen, op-ed columnist at The New York Times, one of the key discussions which will take place in the morning of the first day of the International Luxury Conference 2015 event will look at the geopolitical, economic, and cultural forces shaping the luxury industry and changing the way consumers interact with brands. Joining Cohen to talk about these testing times will be Nader Mousavizadeh, co-founder and partner at Macro Advisory Partners, and Bernard Kouchner, former French Minister of Foreign and European Affairs and founder of Médecins Sans Frontières. Together they will look at the troubles in today’s Russia, the new conservative attitude to luxury in China, as well as the impact of the floating Swiss Franc and what these mean for the industry going forward.

Indeed, Euromonitor International’s latest luxury goods data reveal that 2015 was yet another challenging year for the industry. In particular, the economic instability, social unrest, and armed conflict buffeting formerly fast-growing emerging markets have driven up the strategic importance of the developed markets, not to mention the turmoil on the global foreign-exchange markets since late 2014 creating a global currency war for the industry.

In 2014 and 2015, mainland China posted its lowest growth in sales of luxury goods since our records began (a real decline of -3% and +1% respectively). The slowdown in growth also means that China will not overtake Japan to become the world’s second largest luxury goods market in the world in the next five years and is expected to maintain its third position ahead of France and the UK in the short to medium term.

Similarly, Russia’s luxury goods sales delivered a disappointing real decline of 5% (real RUB terms) in 2015, making it the world’s second worst-performing market after Ukraine. With the backdrop of sanctions and the deterioration of relations with the West, business and consumer confidence in the economy has collapsed, to some extent. On the consumer side, this (alongside falls in real wages) has contributed to a decline in luxury expenditure; and on the business side, a lack of investment and capital outflows. With the risk of an escalation of geopolitical tensions weighing on the economy, however, confidence is likely to remain fragile.

At the same time, external currency pressures continue to create even more headwinds for the industry and are forcing some of the world’s leading luxury brands to revisit their global pricing strategies. The strength of the US dollar and, to a lesser extent, the UK pound, teamed with a surging Swiss franc and debilitated euro in 2014 and 2015, has led to marked consequences for some of the key luxury goods categories. China’s latest currency devaluation could further amplify the situation by creating greater disparities in prices between Asia, North America and Europe. In some markets, prices are going up, while in others, they are going down. It is arguably one of the biggest challenges facing the industry today, particularity on the back of the floating Swiss franc.

One such category which has fallen prey to this currency war is luxury time pieces. What was once heralded as one of the world’s fastest-growing categories is now dwindling in sales. Euromonitor’s new research indicates that global sales of luxury watches declined (-0.5%) in 2014 and will just reach over 1% for 2015 (US$ real terms).

All of this and more on these pressing topics will be discussed at the International Luxury Conference 2015 event.

Strategic Sustainability

The rise of consumer awareness about labour working conditions, sustainable sourcing processes, or environmental policies is shaping the apparel and footwear industry globally. The luxury industry as a whole is under increasing pressure to source, manufacture, distribute, and sell in a more ethical manner as consumers start to assess more carefully how garments are produced and in what type of labour conditions.

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New Euromonitor International Analysis: It’s A Man’s World

As you know, we’ve partnered with Euromonitor International, a world leader in strategy research for consumer markets, to bring unique insights and analysis on the industry. This month, Apparel & Footwear Research Associate Bernadette Kissane takes a look at the growth of menswear—and how for the second consecutive year, it’s actually outpacing the growth of womenswear. 

Global Apparel: It’s a Man’s World

Menswear is growing faster than womenswear. For the cynics dismissing this as a statistical anomaly, the pattern is emerging as clearly as a perfectly tailored bespoke suit. In 2014, for the second consecutive year, growth in men’s clothing surpassed that of women’s, with 5 percent and 4 percent growth in current value terms respectively. Although menswear only accounts for 25 percent of total global apparel sales, the category is expected to continue outperforming womenswear with an annual value sales increase of US $40 billion from 2014 to 2019. This growth is being driven by cultural shifts as men become more concerned with their appearance. This is coupled with large disposable income levels for men, which remain 50 percent higher in comparison to women’s disposable income levels. As the four main fashion capitals, New York, London, Paris, and Milan, prepare for upcoming Men’s Fashion Weeks, brands need to consider how best to cater to this increasingly lucrative consumer group.

Liberal Attitudes

A big sales leap in emerging countries saw China overtake the United States in sales in 2014, gaining the largest menswear retail value sales worldwide at US $85 billion. Furthermore, India experienced 14 percent growth in men’s clothing compared to 11 percent for women’s clothing in the year. Similarly, men’s grooming products are experiencing a significant sales boost in emerging countries. For example, in India, male skin care saw a value CAGR of 20 percent over 2009-2014. This illustrates the emergence of a more open-minded mid-income male consumer base, with these consumers being highly conscious of their appearance, providing the apparel industry with a huge opportunity.

Big Spenders

According to Euromonitor International data, growth in men’s designer apparel and footwear is surpassing growth in overall menswear, as men are more inclined to pay higher prices for branded products that they know and trust. Moreover, men are less frequent buyers than women, instead choosing to focus on quality and style over disposable fashion. The increasing demand for luxury products has also begun to infiltrate sportswear, with retailer Mr. Porter notably introducing a sport section focusing on technically advanced and performance-led clothing.

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To address men’s preference for premium products, leading fashion houses such as Burberry, Alexander McQueen and Hermes launched men-only stores in the last few years. Furthermore, J. Crew entered the United Kingdom with a men’s store, thus highlighting the potential for growth in this country. Meanwhile, department stores are refurbishing and relocating their menswear departments, moving these to more prominent locations. Traditionally, women were the core purchaser of men’s clothing. This, however, is changing, as men begin to enjoy shopping for themselves and becoming more creative with their everyday wardrobes. As a result, those who choose to invest in creating retail spaces dedicated solely to men, while providing a comfortable and engaging store experience, will be best equipped to capitalize on this expanding product area.

Mars and Venus

It is telling that "lads' mags" are now evolving into lifestyle magazines that men use as educational tools for the latest health, fashion, and beauty trends. A growing number of blogs and menswear internet retailing players are meanwhile providing a wealth of information on styles and brands, informing men about how and what to wear. A new generation of fashion-conscious millennials are thus finding the confidence to experiment with their personal style. However, this increasing interest in fashion does not necessarily mean that brands should target male consumers in similar ways to women. Instead a curated edit of items, a seamless transactional process and an indirect approach to marketing will go a long way in appealing to this target consumer base.

Established in 1972, Euromonitor International is the world leader in strategy research for consumer markets. Comprehensive international coverage and leading edge innovation make Euromonitor's products an essential resource for companies large and small, national and global. 

As an independent company, Euromonitor offers unmatched detail and unbiased content for every region, country, category and channel. From socioeconomic context to intimate detail on the smallest products or markets, Euromonitorprovides market research and surveys focused on your organization’s needs.  

For more information, visit our website or contact Chourouk Gorrab, Communications Executive at Euromonitor International, at +44 (0)20 7251 8024 EXT 1357 or This email address is being protected from spambots. You need JavaScript enabled to view it..

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