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