New Apparel Research: Part 1 – A Focus on Geographies

March 11th, 2013
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Ashma.kundeAnalyst Insight by Ashma Kunde, Analyst – Apparel, Euromonitor International

View Ashma Kunde's profile on LinkedIn

Fashions fade but apparel
growth is eternal – or so it seems. According to Euromonitor International’s
latest research, the global apparel market was valued at US$1.7 trillion in
, growing by 5.8% over the year. However, varying degrees of global economic
recovery continued to be reflected in apparel’s regional performances. 

Value Sales Growth 2012 by Region 

Apparel Value Sales Growth 2012 by Region

Source: Euromonitor

Note: Fixed 2012 Exchange

consumer confidence still on trend in the West

If hemlines really did move in
tandem with economic growth, as per George Taylor’s ‘Hemline Index’ theory,
women’s skirts should be skimming their ankles in Western Europe. Nonetheless,
whilst the macroeconomic climate remains plagued by austerity measures and high
unemployment, the apparel market offers that small glimmer of hope, growing by
0.6% in 2012.

Still underperforming the
global average, the UK was the region’s biggest growth story in 2012,
registering a 3.6% rise. Although a triple-dip recession remains on the cards
for 2013, the threat has done little to dent apparel retail sales as consumers
are happily devouring the plethora of discount and economy brands on the

At the other end of the
spectrum the peripheral EuroZone economies of Greece and Portugal were the
worst performers, declining at double-digit rates in 2012. Whilst the
Portuguese market is forecast to improve by 2014, conditions are expected to
sour further for Greece, Spain and Italy.

The US remained the world’s
largest apparel market
, accounting for 21% of global value sales and growing by
2.2% in 2012. Euromonitor International forecasts consumer confidence to
recover in the US by late 2013 following rising house prices and further job
creation initiatives. The country will remain an integral driver of growth over
the next five years, explaining why leading international retailers like
Inditex, H&M and Fast Retailing are focused on making an impression in this

remain all the rage…

The BRIC markets are now stable
features of the world’s top 10 largest apparel markets, accounting for 26% of
global value sales in 2012, a figure forecast to rise to 32% by 2017. Click to Tweet!

Despite anxiety about the
Chinese economy slowing down, its apparel market continues to steam ahead, set
to overtake the US as the world’s largest by 2017. Click to Tweet! As international brands from
both the mass and luxury ends of the spectrum seek to capitalise on the boom,
it will become increasingly necessary to look beyond the saturated metropolises
to lower-tier cities for growth.

Following the change in FDI
regulations in late 2012, making conditions more favourable for multi-brand
retailers, India has seen renewed euphoria in the apparel space, with H&M,
Uniqlo and Gap all in talks to enter the market. A booming middle-class and
rapid urbanisation have made India’s US$49 billion market ripe for the picking.
However, per capita sales of apparel in 2012 were five times lower than in
China and 46 times lower than in Norway, thus shedding light on the wide income
disparities which prevail in the country. 

Russia was the second best
performing BRIC market in 2012 after India, growing by 13%. Following the
paradigm shift in distribution from informal to organised retail in Russia,
store-based expansion is providing plenty of opportunities for growth, with
this channel a prime focus for both international and local players.

And finally, in Brazil, access
to credit has provided an important boost to consumer expenditure, and as a
result apparel growth outperformed national GDP growth in 2012. Looking
forward, high-profile sporting events such as the FIFA World Cup in 2014 and
the Olympic Games in 2016 are expected to provide a lift to sportswear in

…but time to
scout out the next big thing?

However, it may be time to
look beyond the well-considered BRIC quartet to other dynamic markets. Ukraine
emerged as Eastern Europe’s star performer in 2012, where apparel market value
growth was 7.3%, almost twice as much as Russia’s 3.7%. Click to Tweet! Venezuela and Argentina
witnessed the strongest growth globally over 2007-2012 in value CAGR terms.
Another regional star performer was Mexico, which is also expected to be the
fifth biggest contributor to absolute growth over 2012-2017 after the BRICs. It
has emerged as a key battleground for fast fashion as H&M, Gap and Forever
21 join Zara in strengthening their positions there.


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